The Bank of England’s approach to rule permissions and waivers

1: Overview

1. This consultation paper (CP) seeks views on the Bank of England’s (Bank) proposal for a new statement of policy (SoP) that will establish the Bank’s approach to rule permissions given under the Financial Services and Markets Act 2000 (FSMA). The permissions power, alongside the requirements powers^{footnote [1]}, and a rule review power which the Bank will consult on in due course, is a key part of embedding agility and flexibility in the Bank’s regulatory toolkit as it develops. The permissions power enables the Bank to give a permission which allows for rules to be modified or waived for the recipient of the permission where the Bank is satisfied that the applicant meets specific criteria. In many cases, use of the power will replace use of the existing regulatory approvals process (sometimes referred to as a ‘non-objection’ process), placing a more predictable and transparent framework around it.

2. The proposals in this CP seek views on how the Bank will use its permissions power, how firms can apply for a rule permission, and the Bank's approach to publishing information relating to approved rule permissions. In order to be as transparent as possible in its use of these powers, the Bank is consulting on its approach.

3. This CP is relevant to recognised UK central counterparties (CCPs) and recognised UK central securities depositories (CSDs), which are collectively referred to in this CP as ‘FMIs’, and HMT-designated Critical Third Parties (CTPs).^{footnote [2]} This CP is also relevant to third-country CSDs and ‘systemic overseas CCPs'^{footnote [3]} at the point at which Bank rules are applied to these entities. Where CTPs apply for use of a permission, it is likely that they would wish to submit parallel applications to the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA), which share regulatory and oversight responsibility for these firms with the Bank

4. The Bank considers that its proposed approach is aligned with the Bank’s primary financial stability objective through supporting better understanding of available rule permissions. This is anticipated to support compliance with our rules, and to enhance the effectiveness of our FMI supervision.

5. Furthermore, the Bank considers the proposals would advance the secondary innovation objective by making the Bank’s approach to giving permissions and waivers clearer and more transparent, which will support FMIs’ ability to plan ahead and innovate by giving greater clarity regarding our decision making. In addition, approved permissions applications may support innovation by allowing regulation to be more closely aligned to the outcomes that the Bank is seeking without being unduly prescriptive.

6. As producing general policy on how the Bank proposes to perform functions under FSMA is an ‘FMI function’ in the meaning given by section 30D(3) of the Bank of England Act 1998, the Bank is required to have regard to specified matters^{footnote [4]} known as ‘have regards’ in developing its policy.

7. The Bank’s view is the following ‘have regards’ are most relevant to the development of this SoP:

• Exercising the Bank’s functions transparently.
• Using the Bank’s resources in the most efficient and economic way.
• The desirability where appropriate of the Bank exercising its FMI functions in a way that recognises differences in the nature of, and objectives of, businesses carried on by different persons.
• The principle that a burden or restriction which is imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of the burden or restriction.

8. In the remit letter from the Chancellor of the Exchequer to the Bank on 1st July 2025, the Chancellor recommended that the Financial Market Infrastructure Committee (FMIC) should have regard – in the exercise of its FMI functions – to the Government’s policy towards the financial services sector. The Bank considers that these proposals particularly support:

• The role of proportionate regulation in facilitating growth.
• Streamlining administrative burdens and processes for FMIs to offer new products and services where possible, whilst maintaining high regulatory standards.

9. FSMA requires the Bank to undertake cost benefit analysis when using certain rule-making powers.^{footnote [5]} Although these proposals do not involve rule making, the Bank has included a non-statutory cost benefit analysis, as a matter of best practice.

Background

10. The Financial Services and Markets Act 2023 amended FSMA to introduce a new power for the Bank to allow a firm to modify or disapply a rule, by giving a permission under the ‘permissions power’^{footnote [6]}. This allows the Bank, on application or with the consent of an FMI or CTP that is subject to Bank rules, to give a permission that enables them to not apply the rules, or to apply the rules with a modification specified in the permission. Before the permissions power can be used, HMT must first set out the scope of rules the power can apply to, through regulations. Although these regulations have not yet been made, HMT have published a policy statement noting that it intends to make regulations that set the scope of Bank’s permissions power as applying to any Bank rules, similar to the approach taken for the PRA. The permissions power is distinct to the existing general modification and waiver power also found in FSMA^{footnote [7]}. This is because, unlike the permissions power, the general modification and waiver power has statutory conditions for use.

11. This consultation sets out the Bank’s proposed general approach to the giving of rule permissions and an application form for these permissions. It is being published in parallel with the Bank’s consultation paper on ‘Ensuring the resilience of CCPs’, which sets out the Bank’s proposed approach to replacing the firm-facing elements of the UK European Market Infrastructure Regulation (UK EMIR), and the related legally binding technical standards (BTS), with Bank rules. That consultation includes separate subject-specific SoPs setting out how the Bank will determine permissions power applications for specific rules in the CCP rulebook. Where there is an individual subject-specific SoP setting out the application to specific rules, the Bank proposes to follow the criteria set out in that SoP.

12. For rules where there is no specific SoP setting out the approach to a permission, the Bank intends in general to assess applications for permissions against the same criteria given in statute for the general modification and waiver power.

Implementation

13. The Bank proposes that the final policy will be published (and take effect) following consideration of feedback received as a result of this consultation.

Consultation questions, responses and next steps

14. This consultation closes on 18 November 2025.

15. The Bank invites feedback on the proposals set out in this consultation through the questions listed below. Responses can be submitted through the following CP response link or by email to CP_approach_to_rule_permissions_and_waivers@bankofengland.co.uk.  

1. Do you have any comments on the proposals as set out in the consultation paper and draft statement of policy?
2. Do you have any comments on the application form for permissions sought under section 138BA of FSMA? (Appendix of the draft statement of policy)

16. Please indicate in your response if you believe any of the proposals in this consultation paper are likely to impact persons who share protected characteristics under the Equality Act 2010, and if so, please explain which groups and what the impact on such groups might be. 

2: The Bank’s proposals

17. The Bank proposes a new SoP setting out the Bank’s general approach to giving permissions under section 138BA of FSMA. As noted above, the Bank is consulting separately on Statements of Policy as part of the Bank consultation paper ‘Ensuring the resilience of CCPs’ relating to subject-specific rules permissions in the CCP rulebook. The Bank considers that setting out the Bank’s approach in the SoP will help to improve clarity and transparency over the process the Bank will use to assess applications, including the assessment criteria where there is no subject-specific rule permission and accompanying SoP. This in turn should reduce unnecessary costs for both the Bank and industry by reducing the need to clarify relevant requirements.

18. The proposed SoP has three key elements, which propose that:

• the criteria or factors which the Bank expects to take into account when assessing permission applications for certain rules will generally be communicated in subject-specific SoPs the Bank may publish;
• that when assessing rule permission applications for rules where the Bank has not set subject-specific rule permission assessment criteria, the Bank expects to consider, in common with the separate general modification and waiver power, whether the rules are unduly burdensome or do not achieve their purpose, and also whether giving the permission does not adversely affect advancement of the Bank’s financial stability objective; and
• for applications for rule permissions and waivers the Bank will expect applications to be accompanied by sufficient information and evidence demonstrating how the relevant assessment criteria are met, making use of the standardised form where relevant.

19. Where the Bank has not set out criteria for a rule permission in a subject-specific SoP, the Bank’s intention is to encourage firms wishing to apply for the modification or waiver of a rule to apply under the Bank’s general modification and waiver power. In these instances, the Bank proposes, in general, to assess an application against the statutory criteria for the general modification and waiver power, in order to ensure a consistent approach to the use of the two powers. See Figure 1 for an illustrative overview of a permissions application.

Figure 1: Initial application for permission

20. The Bank will aim to assess and conclude permissions applications, including publishing details of approved permissions, in a timely manner. It also proposes to publish data in respect of its timelines for assessing permissions applications against any timelines set in subject-specific SoPs, the attached SoP and in absolute terms. This is to support transparency in the Bank’s performance as a regulator. This data will be published periodically on the Bank’s website or other appropriate means.

21. The Bank’s use of the permissions power (as well as of the general modification and waiver power) is subject to general public law requirements. Where the Bank refuses to give a permission, makes a permission subject to conditions or revokes or varies a permission, the Bank anticipates that, consistent with the approach for the PRA, a person may refer the matter to the Upper Tribunal.

Statutory objective analysis

22. The Bank has an objective to protect and enhance the stability of the financial system in the UK. The proposals in this SoP are intended to protect and enhance UK financial stability by setting a clear and transparent approach to rule permissions, which the Bank expects to enable a more adaptable rulebook, facilitate compliance with our rules, as well as enhance the effectiveness of supervision of FMIs through clearer and more transparent criteria for supervisory approvals. This is as a result of FMIs having more clarity around how the Bank will assess rule permission applications.

23. The Bank’s financial stability objective would also be advanced by the application of the statutory criteria that apply to the general modification and waiver power when an FMI applies for a rule permission and the Bank has not set out specific criteria. This helps to ensure a consistent approach to the giving of rule permissions, helping to maintain a level playing field for FMIs subject to Bank rules, and prevents modifications that would adversely affect the financial stability of the UK.

24. The Bank considers that its proposals are compatible with its secondary innovation objective, as setting out our approach offers greater transparency and clarity to FMIs wishing to innovate. Clarity about how the Bank will assess rule permission applications will make it more efficient for FMIs and the Bank to apply for and assess rule permissions and facilitate more accurate planning and timely implementation by FMIs of innovations to their services. This can increase confidence within the market and supports flexibility and trust in the Bank’s regulatory framework, which further supports FMIs’ ability to innovate within that framework.

‘Have regards’ analysis

25. In developing these proposals, the Bank has had regard to the matters it is required to have regard to,^{footnote [8]} including the aspects of the government’s economic policy to which the Financial Market Infrastructure Committee should have regard as set out in the Chancellor’s letter to FMIC on 1 July 2025. The following factors, to which the Bank is required to have regard, were most significant in the Bank’s analysis of the proposal:

‘Have regards’:

• The principle that the Bank should exercise its functions transparently: The proposed SoP provides transparency on how the Bank will exercise its functions relating to giving rule permissions. In particular, it explains how the Bank will use the new power, how FMIs can apply for rule permissions and where the Bank has not set out subject-specific assessment criteria for permissions on particular rules, what criteria their applications will be assessed against.
• The use of the resources of the Bank in the most efficient and economic way: The proposed SoP will clarify how the Bank will use its powers and will ensure that FMIs' applications for rule permissions contain the correct information, including through establishing a standardised application form. This will make it easier and more efficient for the Bank to review applications.
• The desirability where appropriate of the Bank exercising its FMI functions in a way that recognises differences in the nature of, and objectives of, businesses carried on by different persons: Although the Bank’s proposals establish a standardised process through which FMIs may apply for permissions, they allow for adequate flexibility to allow the differences in their business models to be taken into account.
• The principle that a burden or restriction which is imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of the burden or restriction: The Bank considers that the permissions power will allow the Bank to follow a more proportionate approach to regulation.
• Aspects of the government’s economic policy:
  • The role of proportionate regulation in facilitating growth: The use of the permissions power should support the Bank in applying regulation proportionately by allowing a more efficient process for disapplying certain rules for FMIs under criteria that the Bank considers proportionate to the risks they incur.
  • Streamlining administrative burdens and processes for FMIs to offer new products and services where possible, whilst maintaining high regulatory standards: The Bank considers that through the use of the permissions power, the existing ‘non-objections’ process for CCPs and CSDs will in many cases be made more transparent, clear and standardised, making the process for modifying or waiving certain rules more efficient. In addition the Bank has committed to keeping itself accountable through publishing metrics on the time taken to process applications.

26. The Bank has had regard to other factors as required. Where analysis has not been provided against a ‘have regard’ for this proposal, it is because the Bank considers that ‘have regard’ to not be a significant factor for this proposal.

Non-statutory cost benefit analysis

27. The Bank has considered the costs and benefits of this proposal. The benefits of the proposed SoP include providing clarity on the Bank’s approach to the giving of rule permissions. It will allow for more efficient use of both FMIs’ and the Bank’s resources when FMIs seek rule permissions. Without the clarity provided by the SoP, there would be additional costs associated with ambiguity surrounding rule permissions as FMIs, as the Bank would be required to spend time clarifying its approach on a case-by-case basis. The Bank does not consider there to be material costs associated with the proposed SoP, and so has come to an overall assessment that the benefits will outweigh the minimal costs associated.

Equality and diversity

28. The Bank considers that the proposals do not have equality and diversity implications.

Appendix: draft statement of policy

• The Bank of England's approach to rule permissions and waivers

  1: Overview

  1. This Bank of England (the Bank) statement of policy (SoP) sets out the Bank’s approach to the giving of rule permissions under section 138BA of the Financial Services and Markets Act 2000 (FSMA)^{footnote [9]} (the ‘permissions power’). It applies to recognised UK central securities depositories (CSDs), third-country CSDs, recognised UK central counterparties (CCPs) and systemic overseas CCPs,^{footnote [10]} which are collectively referred to in this SoP as ‘FMIs’. It also applies to HMT-designated Critical Third Parties (CTPs).^{footnote [11]} Where CTPs apply for use of a permission, it is likely that they would wish to submit parallel applications to the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA), which share regulatory and oversight responsibility for these firms with the Bank. The Bank would coordinate with the PRA and FCA in such cases.

  2. The permissions power was inserted into FSMA by the Financial Services and Markets Act 2023 and allows the Bank, on the application or with the consent of an FMI or CTP who is subject to Bank rules, to give the FMI or CTP a permission that enables them to not apply certain rules, or to apply those rules with a modification specified in the permission (rule permission). The permissions power, alongside the requirements powers^{footnote [12]} and a rule review power, which the Bank will consult on in due course, are a key part of embedding agility and flexibility in the Bank’s regulatory toolkit. This power sits alongside the Bank’s ’general modification and waiver power’ under section 138A of FSMA,^{footnote [13]} which is subject to certain specific statutory criteria for its use by the Bank.

  3. The Bank’s power to give rule permissions using the permissions power is not subject to statutory criteria and is instead determined with reference to the general policy approach established by the Bank. In the case of certain specific rules, there are subject-specific statements of policy that set out how the Bank intends to assess applications for rules permissions relating to those specific rules. Where there is no subject-specific statement of policy, the Bank encourages FMIs and CTPs to apply for use of the general modification and waiver power. Should an FMI or CTP wish to apply for the use of the permissions power where there is no subject-specific statement of policy, the Bank expects to apply the same criteria for use of the general modification and waiver power. This SoP explains how the Bank will generally approach determining applications to use the permissions power.

  5. The subject-specific SoPs will be drafted in a proportionate manner according to the nature, complexity and significance of the rule permission. Generally, the Bank expects these subject-specific SoPs will include:

  i. a description of the purpose of the rule permission, including an explanation of the effect the rule permission has on the Bank’s rules;

  ii. the assessment criteria which the Bank will expect to be satisfied, including any specific factors that it will take into account, in deciding whether to give the permission;

  iii. where appropriate, details of the types of supporting information applicants should submit to the Bank so that it can assess the rule permission application; and

  iv. the expected timelines for determining the outcome of completed permissions applications.

  6. Where the Bank has not set out criteria, the Bank encourages FMIs and CTPs wishing to apply for the modification or waiver of a rule to apply under the Bank’s general modification and waiver power in section 138A of FSMA.^{footnote [14]}

  7. If an FMI or CTP applies for a rule permission where the Bank has not set out subject-specific criteria, in general, the Bank will consider, and place significant weight upon, statutory criteria that apply to the Bank’s general modification and waiver power, which are whether:

  i. Compliance by an FMI or CTP with the unmodified rules would be unduly burdensome or would not achieve the purpose for which the rules were made; and

  ii. Giving the permission would not adversely affect the advancement of the Bank’s financial stability objective.

  8. The Bank expects applications for a rule permission under section 138BA of FSMA or a rule modification or waiver under section 138A of FSMA to be accompanied by sufficient information and evidence demonstrating how the relevant criteria are met. Where necessary to allow a decision to be made, the Bank will request additional detail or information not provided in the application or will ask for clarification of information that is not clear.

  9. The Bank’s use of the permissions power is subject to general public law requirements. Where the Bank refuses to give a permission, makes a permission subject to conditions or revokes or varies a permission, a person may refer the matter to the Upper Tribunal.

  2: Initial application for permission

  10. Where an FMI or CTP is considering an application for a section 138BA rule permission where the Bank has set out assessment criteria for a subject-specific permission in an SoP, it is encouraged to speak to their usual supervisory contact in the first instance before typically completing the relevant sections of and submitting the Permissions FMI and CTP Application Form (Appendix). Where an FMI or CTP is considering an application for a section 138BA rule permission where the Bank has not set out assessment criteria for a specific permission, it is also encouraged to speak to its usual supervisory contact in the first instance before applying for a rule modification or waiver under section 138A of FSMA using the general modification and waiver FMI and CTP application form.

  11. If an FMI or CTP wishes to apply under section 138BA of FSMA where the Bank has not set out permission specific assessment criteria in an SoP, it is encouraged to complete the relevant sections of and submit the Permissions FMI and CTP Application Form (Appendix).

  12. FMIs or CTPs must notify the Bank immediately on becoming aware of any matter which could affect the continuing relevance or appropriateness of the application, the permission or any condition to which the permission is subject.

  13. FMIs or CTPs are typically required to provide details of a precedent permissions notice (meaning any existing related permission decision) when applying for a new rule permission.

  14. Where applicable, send your completed application form, together with any supporting documentation required, to FMIInformation@bankofengland.co.uk.

  Application timelines

  15. We aim to assess completed applications in a timely manner, and within the timelines established in subject-specific Statements of Policy where relevant, or as noted below for rules without subject-specific Statements of Policy. The Bank will confirm receipt of the completed application of the FMI or CTP.

  16. In general, the Bank expects to determine the outcome of a completed application within 80 business days from the receipt of the application, or within 120 days for more complex applications, unless there are exceptional circumstances where determination could take longer. During this time the Bank will assess the completeness of the application and evaluate the information provided.

  17. Where the Bank has considered an application to be complete, this will not prevent the Bank from requesting additional information necessary for carrying out its assessment. The request will specify the additional information required and the reasons for the request.

  18. Should the Bank need to request further information within these deadlines the Bank will specify the additional information requested and the reasons for the request. The day-count will pause until the requested information has been received, and an extra 10 business days will be added to the deadline. Any subsequent requests for information will not affect the deadline. Persistent failure to provide the requested information may result in rejection of the application.

  3: Decision on the application

  19. When the Bank has reached a decision on an application, it will communicate this in writing to the FMI or CTP.

  20. Where the Bank approves an arrangement subject to certain conditions, or rejects an application for permission, it will state the reasons on which the decision is based.

  21. In some cases, the approval of a rule permission may mean the Bank needs to impose or vary a requirement that has been imposed on an FMI under section 55L of FSMA as modified and applied by paragraph 9B(1) of Scheduled 17A of FSMA, known as the ‘requirements power’.^{footnote [15]} This power allows the Bank to require an FMI to take action, or refrain from taking certain actions.

  4: Varying or revoking a permission

  22. If the Bank decides to amend the conditions of a permission or to revoke a permission, it will notify the FMI or CTP of its decision and provide the reasons for it.

  23. Where an FMI or CTP is aware of a change in circumstance whereby it may no longer fulfil the conditions under which the permission for the arrangement was given, it should inform the Bank of this change in circumstance.

  5: Publishing permissions

  24. As noted in HMT’s permissions statutory instrument, the Bank is required to publish details of permissions we approve, unless we consider it inappropriate or unnecessary to do so.

  25. The majority of permissions are published in full. The Bank may consider publishing certain permissions in abridged form at the request of the affected FMI or CTP.

  6: Evaluating the Bank’s performance in relation to permissions and waivers

  26. The Bank will collect and publish information on its performance in relation to timelines for assessing completed rule permission applications. This will include:

  i. For general and subject-specific permissions, where the Bank has set timelines for assessing completed rule permission applications, the percentage of applications for which the outcome is determined within the specified timelines, and the average number of business days.

  ii. For modification and waiver requests, the average number of business days taken to determine the outcome for requests.

  The Bank will collate and publish this information on its website.

  Appendix: Permissions FMI and CTP Application Form

  • Appendix: Permissions FMI and CTP application form