Schedule 3, paragraph 1(5)

After paragraph 2 of the Schedule insert— The composition of the management body of an exchange must reflect an adequately broad range of experience. The management body must possess adequate collective knowledge, skills and experience in order to understand the exchange's activities and main risks. Members of the management body must— commit sufficient time to perform their functions on the management body; act with honesty, integrity and independence of mind; and effectively— assess and challenge, where necessary, the decisions of the senior management; and oversee and monitor decision-making. The management body must— define and oversee the implementation of governance arrangements that ensure the effective and prudent management of the exchange in a manner which promotes the integrity of the market, which at least must include— the segregation of duties in the organisation; and the prevention of conflicts of interest; monitor and periodically assess the effectiveness of the exchange's governance arrangements; and take appropriate steps to address any deficiencies found as a result of the monitoring under paragraph (b). An exchange must— devote adequate human and financial resources to the induction and training of members of the management body; ensure that the management body has access to the information and documents it requires to oversee and monitor management decision-making; and notify the FCA of the identity of all the members of its management body. An exchange and, if it has a nomination committee, its nomination committee must engage a broad set of qualities and competences when recruiting persons to the management body, and for that purpose have a policy promoting diversity on the management body. The number of directorships a member of the management body can hold at the same time must take into account individual circumstances and the nature, scale and complexity of the exchange's activities. If an exchange is significant the following requirements apply to the management body— members of the management body must not at the same time hold positions exceeding more than one of the following combinations— one executive directorship with two non-executive directorships (or where so authorised by the FCA under regulation 44(1), three non-executive directorships); or four non-executive directorships (or where so authorised by the FCA under regulation 44(1), five non-executive directorships); and the management body must have a nomination committee unless it is prevented by law from selecting and appointing its own members. For the purposes of sub-paragraph (1)(a)— any directorship in which the person represents the United Kingdom is not counted; executive or non-executive directorships— shall be counted as a single directorship; and held within the same group, or held within the same undertaking where the exchange holds a qualifying holding within the meaning of Article 4.1.31 of the markets in financial instruments directive, any directorship in an organisation which does not pursue predominantly commercial objectives is not counted. The nomination committee referred to in sub-paragraph (1)(b) must— be composed of members of the management body who do not perform an executive function in the exchange; identify and recommend to the exchange persons to fill management body vacancies; at least annually assess the structure, size, composition and performance of the management body and make recommendations to the management body; at least annually assess the knowledge, skills and experience of individual members of the management body and of the management body collectively, and report to the management body accordingly; periodically review the policy of the management body for the selection and appointment of senior management and make recommendations to the management body; and be able to use any forms of resource it deems appropriate, including external advice. In performing its functions under sub-paragraph (3) the nomination committee must take account of the need to ensure that the management body's decision-making is not dominated by— in a manner that is detrimental to the interests of the exchange as a whole. any one individual; or a small group of individuals, In performing its function under sub-paragraph (3)(b) the nomination committee must— evaluate the balance of knowledge, skills, diversity and experience of the management body; prepare a description of the roles, capabilities and expected time commitment for any particular appointment; decide on a target for the representation of the underrepresented gender in the management body and prepare a policy on how to meet that target; engage a broad set of qualities and competences, and for that purpose have a policy promoting diversity on the management body. In sub-paragraph (1), “significant” in relation to an exchange means significant in terms of the size and internal organisation of the exchange and the nature, scope and complexity of the exchange's activities.

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Source: legislation.gov.uk · retrieved 2026-09-04