Financial Services And Markets Citation, commencement and interpretation 1 1 This Order may be cited as the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2010. 2 This Order comes into force on 24th February 2010. 3 In this Order, “ the Act ” means the Financial Services and Markets Act 2000 and “the Principal Order ” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 . Amendment of the Principal Order 2 1 The Principal Order is amended as follows. 2 In article 77 (instruments creating or acknowledging indebtedness)— a in paragraph (1), for “article 78” substitute “article 77A or 78”; b in paragraph (2), after sub-paragraph (d) insert— e an instrument which does not fall within article 77A by reason only of failing to meet the requirements of either sub-paragraph (e) or (f) (or both) of paragraph (2) of that article. . 3 After article 77 insert— Alternative finance investment bonds 77A 1 Rights under an alternative finance investment bond, to the extent that they do not fall within article 78. 2 For the purposes of this article, arrangements constitute an alternative finance investment bond if— a the arrangements provide for a person (“the bond-holder”) to pay a sum of money (“the capital”) to another (“the bond-issuer”); b the arrangements identify assets, or a class of assets, which the bond-issuer will acquire for the purpose of generating income or gains directly or indirectly (“the bond assets”); c the arrangements specify a period at the end of which they cease to have effect (“the bond term”); d the bond-issuer undertakes under the arrangements— i to make a repayment in respect of the capital (“the redemption payment”) to the bond-holder during or at the end of the bond term (whether or not in instalments); and ii to pay to the bond-holder other payments on one or more occasions during or at the end of the bond term (“the additional payments”); e the amount of the additional payments does not exceed an amount which would, at the time at which the bond is issued, be a reasonable commercial return on a loan of the capital; and f the arrangements are a security admitted to— i an official list (in accordance with the provisions of Directive 2001/34/ EC of the European Parliament and of the Council on the admission of securities to official stock exchange listing and on information to be published on those securities) ; or ii trading on a regulated market (within the meaning of Article 4.1(14) of Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments) or on a recognised investment exchange (within the meaning of section 285 of the Act). 3 For the purposes of paragraph (2)— a the bond-issuer may acquire the bond assets before or after the arrangements take effect; b the bond assets may be property of any kind, including rights in relation to property owned by someone other than the bond-issuer; c the identification of the bond assets mentioned in paragraph (2)(b) and the undertakings mentioned in paragraph (2)(d) may (but need not) be described as, or accompanied by a document described as, a declaration of trust; d the reference to a period in paragraph (2)(c) includes any period specified to end upon the redemption of the bond by the bond-issuer; e the bond-holder may (but need not) be entitled under the arrangements to terminate them, or participate in terminating them, before the end of the bond term; f the amount of the additional payments may be— i fixed at the beginning of the bond term; ii determined wholly or partly by reference to the value of or income generated by the bond assets; or iii determined in some other way; g if the amount of the additional payments is not fixed at the beginning of the bond term, the reference in paragraph (2)(e) to the amount of the additional payments is a reference to the maximum amount of the additional payments; h the amount of the redemption payment may (but need not) be subject to reduction in the event of a fall in the value of the bond assets or in the rate of income generated by them; and i entitlement to the redemption payment may (but need not) be capable of being satisfied (whether or not at the option of the bond-issuer or the bond-holder) by the issue or transfer of shares or other securities. 4 An instrument excluded from paragraph (1) of article 78 by paragraph (2)(b) of that article is not thereby taken to fall within paragraph (1) of this article. . 4 In article 78(2), before the words “There are excluded” insert “Subject to paragraph (3),”. 5 After article 78(2) insert— 3 Paragraph (2)(a) does not exclude an instrument which meets the requirements set out in sub-paragraphs (a) to (e) of article 77A(2). . Amendment of the Financial Services and Markets Act 2000 (Collective Investment Schemes) Order 2001 3 1 The Schedule to the Financial Services and Markets Act 2000 (Collective Investment Schemes) Order 2001 is amended as follows. 2 In paragraph 5(1)(a) after “77” insert “or 77A” and for “(instruments creating or acknowledging indebtedness)” substitute “(debt instruments)”. Consequential amendments 4 The Schedule (which contains consequential amendments) has effect. Dave Watts Tony Cunningham Two of the Lords Commissioners of Her Majesty’s Treasury 19th January 2010