Becoming a TeX member is a 2-stage process:
- Join TeX
- Register with TeX
Joining TeX will allow you to participate in relevant TeX Groups but does not provide access to the TeX register and other secure services reserved for registered members.
When you are ready to send/receive ISO 20022 messages and need the legal agreements necessary when the client’s signature/authorisation remains with their new provider, you need to take this second and final step to go onto the Register of Members. Registering with TeX includes signing up to be bound by the Contract Terms and other associated documents giving you the reassurance that all the liability risks are then covered.
Who can become a TeX member?
The current categories of member are:
Asset Manager: any firm that is ultimately responsible for the maintenance of a fund’s register of unit holders and repurchase of units that are to be redeemed can become an ‘Asset Manager Member’.
Service Provider: any firm that is an:
- ISA manager;
- a platform service provider (in each case as defined in the FCA Handbook from time to time);
- falls within the definition of ‘product provider’ in the FCA Handbook (other than any firm that falls within paragraph (iii) of that definition (ie asset managers) or paragraph (iv) of that definition (operator of a personal pension scheme or stakeholder pension scheme)); or
- intermediate unitholder (as defined in the FCA Handbook).
Pension Provider: any firm that is responsible for the provision and administration of a pension scheme established in the UK or, if one is appointed for the relevant pension scheme, the pension administrator.
Multi-Role: any firm that meets the criteria for more than one category of member (eg both a Service Provider Member and an Asset Manager Member) and will act in either capacity depending on the particular transfer scenario must join as a ‘Multi-Role Member’. This category is only relevant where one legal entity performs more than one role. For example, if a firm meets the criteria for both an Asset Manager Member and Service Provider Member and will act in the role of an asset manager or service provider depending on the transfer scenario, it will be a Multi-Role Member. If different entities within the same corporate group perform different roles, then each of those entities must join as a member in the relevant member class.
Please note a Pension Provider does not form part of the Multi-Role Member category. If you are a Pension Provider in addition to any of Service Provider, Asset Manager or Multi-Role Member then you would need to submit two applications.
There may be other categories of member in the future, as determined by the TeX Board from time to time.
Where do third party administrators and technology providers fit in to TeX?
Currently, unless a party falls within the category of asset manager, service provider, pension provider (which, as defined, includes a pension administrator appointed in respect of the pension scheme) or multi-role member it cannot become a member of the contract club. Other interested parties (such as technology providers) can participate in TeX by becoming an associate, but they do not become members of TeX and they will not be a party to the Membership Agreement.
As far as the Membership Agreement is concerned, technology providers and third party administrators will be the agents or sub-contractors of members, and each member will remain liable for the performance of its obligations by any agent or sub-contractor on its behalf. A member will have failed to comply with its obligations if its agent or sub-contractor has failed to create and send messages in accordance with the standards or comply with the timescales in the SLA.
Is membership restricted to UK firms?
No. A firm can become a member if it is established anywhere in the UK or EEA and is regulated or recognised (as applicable) by the FCA.
The documents of the club are governed by English law and have been drafted under English law. Any disputes will be submitted to the jurisdiction of the English court and members based outside the UK will need to appoint an agent for service in the UK (although please note that all members will be subject to the dispute resolution procedure, which aims to resolve disputes without having to go to court).
How does a corporate group sign up for membership?
Each entity within the group must apply to become a member (whether a service provider, asset manager, pension provider or multi-role member) in its own right. The multi-role membership is not a default category of membership for groups; however, there may be an entity within the group that performs the role of more than one category (eg both an asset manager and service provider) and therefore will sign up as a multi-role member.
Only one joining fee is payable per corporate group. Within a corporate group, the annual membership fee is payable per category of members in a marketing group (ie one annual membership fee for all the asset manager members in a marketing group, plus one fee for all the service provider members etc).
What due diligence will TeX be doing on applicants?
TeX will check only that the applicant:
- is established in the UK or EEA; and
- is authorised or recognised (if established outside the UK) by the FCA; and
- has the necessary FCA permissions for its role.
For applicants to the pension provider member category who are pension administrators for UK pension schemes but are not FCA regulated, the firm is required to provide details of membership of any alternative body or affiliations, a reference from the Chairman of the trustees of any scheme for which the applicant acts as administrator and written confirmation from HMRC that it has no reason to believe the applicant is not a fit and proper person to be a scheme administrator (under the terms of the Finance Act 2004). Amongst other things, this is to guard against pensions liberators / scams. TeX may conduct additional checks and require the applicant to provide additional information to confirm that it meets the TeX criteria for a pension provider member.
When TeX was established there was much discussion regarding the extent of due diligence that TeX should carry out, including whether TeX should undertake any financial and technical due diligence on applicants. It was concluded that if TeX had to carry out extensive financial due diligence that could increase the running costs to members and create barriers to joining the club, which was undesirable when the main object of the club is to facilitate electronic re-registration amongst as many market players as possible. A member is entitled to carry out additional due diligence on another member where it has no pre-existing commercial relationship with that counter-party and its internal policies require additional due diligence to be satisfied. TeX will validate the authority of the person signing the form by contacting the MLRO listed on the FCA register. We will check the signatory is employed by and authorised to act on behalf of the company. The registration will not be processed until we receive confirmation from the MLRO (or deputy).
As there is no requirement currently for members to send and receive data electronically, it was decided that there is no need for TeX to carry out technical due diligence on applicants.
While TeX will carry out the due diligence on an applicant at the point of joining, each member has an on-going obligation to notify TeX of any change in its circumstances that means it no longer meets the membership criteria and ceases to be eligible as a member (eg it loses its FCA authorisation). Also, a member must notify TeX if it becomes aware of those changes in another member. The Whistle-Blowing Policy outlines the circumstances in which a member has to report its concerns about another member.
What is the legal effect of becoming a member of TeX?
- undertakes to TeX and each other member of the club from time to time to be bound by all terms of the Membership Agreement. Please refer to the list of documents that make up “the Membership Agreement”; and
- appoints TeX as its agent for the purpose of (and for this purpose only) agreeing the terms of the Membership Agreement with all other members from time to time. The appointment is irrevocable for so long as the applicant participates in the contract club.
- between that member and TeX, allowing the member to enforce the terms of the Membership Agreement against TeX; and
- between that member and each other member. This means that the terms of the Membership Agreement can be enforced directly between members if there is a dispute; members will not enforce compliance through TeX. It is most likely that a member will look to enforce the Contract Terms against another member, as that is the part of the Membership Agreement that sets out the obligations and liability of parties in relation to transfers.
- The Articles of Association will automatically create the necessary contract between the company (TeX) and each member, and between each of the members amongst themselves, under the Companies Act 2006.
- The other documents that make up the Membership Agreement will not (because they are not part of the Articles of Association) automatically bind every member under the Companies Act 2006. Each applicant will therefore agree these terms with TeX and appoint TeX as its agent to:
- make an offer on behalf of the applicant to each other club member from time to time to comply with the arrangements set out in the club documents; this offer should remain open for so long as the applicant participates in the club;
- accept on behalf of the applicant the offer made by TeX on behalf of each other club member from time to time (whilst the applicant participates in the club) to comply with the arrangements set out in the club documents; and
- agree on behalf of the applicant with each other contract club member from time to time any changes made to any of the contract club arrangements outside the Articles of Association which do not require the member’s express consent.
Who are Associates and what rights do they have?
Associates are not members of TeX; they are firms that are appointed as an “Associate” of TeX at the discretion of the TeX Board and upon signing a letter of appointment. Associates include interested parties in the re-registration process, such as technology or standards providers and third party administrators to asset managers and platforms.
Associates do not become party to the terms of the Membership Agreement, and therefore do not have the same rights as members. For example, they do not have the right to appoint directors or vote on any matters which are to be determined by a vote of the membership.
Under the terms of the associate letter of appointment, associates will be able to:
- participate in an Advisory Council or working group(s);
- access the register of members;
- attend and speak (but not vote) at the TeX AGM and any extraordinary general meetings of TeX members. They may also be invited to attend and speak at other member meetings.
The benefits granted to an Associate are subject to the Associate’s compliance with its obligations under its letter of appointment.
