Here you will find answers to the questions we get asked the most by our members and prospective members. If you can’t find the answer to the question you are looking for please get in touch and we will be happy to help you.
General
What is TeX?
TeX is a not-for-profit organisation which works with the industry to ensure that the maximum benefit is provided to all members.
One of the biggest benefits is that having one single contract means substantial savings are made by eliminating the need for multiple contracts between every pair of companies.
It also means that:
- Everyone has the same rules, liability and commitment
- There is a logical and fair apportionment of risk
- It provides a simple system which is comprehensible
- It decreases disputes and uncertainty as to liability
Members have access to the TeX register, a secure database which provides company information for electronic transfers and contact details in the event of any query or issue.
In addition to the above benefits, all members sign up to conforming with the TeX Service Level Agreement thereby ensuring both cash and in-specie transfers will be completed in a timely manner.
Does TeX provide transfer services?
No. TeX provides the open transfers framework and legal contracts necessary between firms to complete electronic transfers in there, it does not provide a transfer service or solution.
Do all TeX members have to transfer electronically?
No. It has been considered whether TeX should be restricted to those who use electronic messages, but it was concluded that TeX should be open to those who will continue to communicate manually. This position may change in the future.
How will I know who the other members are?
This information is set out in the TeX register of members, a secure database which is accessible online.
Will we have to keep checking the register of members to see who new members are or to see if someone has left TeX?
No. TeX will notify members when new members are admitted to TeX, when a member has its membership suspended, and when a member leaves TeX (whether it resigns or has its membership suspended). Notices will be sent by email to each member who elects to receive TeX register notifications, which is why it is important that members provide a contact email address (or email addresses) that will be monitored.
Who or what is UKFMPG / UKETRG?
The UK Funds Market Practice Group (UKFMPG) is the UK constituent of a global initiative to standardise financial market practices using ISO 20022 XML messages.
Any interested party is welcome to participate, and standards are openly published and free to use.
The UKFMPG transfers working group is (rather confusingly) referred to as the UK Electronic Transfers and Re-registration Group (UKETRG).
This working group agrees and publishes a market practice detailing process steps, message flows, and data content which is utilised by TeX members.
Becoming a TeX member
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.
TeX membership agreement
What makes up the “Membership Agreement”?
The following documents, together with the joining fee and registration forms, make up “the Membership Agreement” that each member will enter into with TeX and each other member. These documents are listed in the order of precedence:
(1) Competition Policy: members will have to comply with the competition policy to ensure that no anti-competitive conduct is carried out under the auspices of the contract club. The policy deals with such things as the conduct of board meetings, meetings of the Advisory Council and any working groups, and member meetings. Compliance with this policy will not relieve any member, or TeX, of its individual legal obligations not to engage in anti-competitive conduct. Associates are also bound by the Competition Policy through the terms of their side letter with TeX.
(2) Articles of Association: the articles deal with basic membership issues and governance and objects of TeX. It is a public document (available at Companies House) on which third parties rely.
(3) Contract Terms: this document is the contractual framework for transfers and it deals with the interaction between members in their capacity as participants in an individual transfer. The contract terms set out the key responsibilities and liabilities of a member when taking part in a transfer scenario.
(4) By-laws: these are the standard terms that apply to every member (eg intellectual property rights, change control, dispute resolution). While the Contract Terms contain specific obligations that apply according to the role a member plays in a transfer, the By-laws apply to every member.
(5) Glossary: this is the glossary of defined terms used in the other contract documents. As the Articles of Association is a public document and needs to be self-contained, terms are also defined within that document.
(6) Service Level Agreement (SLA): this is the agreement that was produced and agreed by an industry working group and it sets out the service levels (ie the agreed response and turnaround times for re-registration) and standards that will apply to messages sent between members. The SLA incorporates by reference the UKFMPG’s market practice guidance for the interpretation and use of ISO 20022 messages for investment portfolio and fund transfers (as updated from time to time). Part A of the SLA sets out the service levels and standards and is binding on members, while Part B sets out non-binding guidance notes. The SLA is maintained by the TeX SLA & Operational Advisory Council.
(7) Whistle-Blowing Policy: this sets out the circumstances in which a member will report its concerns about a member to TeX. It mirrors the provisions of the By-laws relating to notification of “Relevant Circumstances” to TeX. Note that:
- this does not replace members’ legal and regulatory obligations to report matters to, for example, the FCA, the Serious Fraud Office or to other authorities, and
- this does not require a member to disclose anything that would place it in breach of law and regulations (eg provisions against ‘tipping off’ in respect of suspicious transaction reporting).
(8) Privacy Policy: this deals with TeX’s use of personal data collected through the operation of the contract club (eg any personal data collected on the application form or obtained in the course of providing the club services about the relationship manager or the individuals who are 1st and 2nd tier escalation contacts). Data protection provisions in relation to customer data, as opposed to member data, are contained in the By-laws.
What if I don’t like any of the provisions in the Membership Agreement?
The terms of these documents are non-negotiable and applicants will be required to accept these terms ‘as is’ if they want to become a member of TeX. One of the TeX objectives is to maintain a visible standard across the industry, which cannot be achieved if individual participants are able to negotiate different terms. With this in mind, the terms were produced, debated and agreed by a Legal Working Group made up of representatives from asset managers and platforms, to ensure that the terms were balanced. The Legal Working Group also took into account feedback provided by other interested parties.
Once you become a member, terms can be changed through the change control procedure, and it will be open to members to recommend changes to the TeX board (or to an Advisory Council or working group set up for this purpose) for consideration.
Do all of the terms apply to TeX and every member?
No. Where rights and obligations apply to:
(a) a “Party”, they apply to each member and to TeX;
(b) a “Member”, they apply to members only and not to TeX – this is mostly the case in the Contract Terms; and
(c) a “Participant”, they apply to a member when it is involved in a transfer.
What terms apply to Associates?
- to pay the joining fee and annual associate fee;
- to comply with the Competition Policy; and
- to comply with the obligations of confidentiality in relation to the confidential information of members and other associates. There is an Associate Privacy Policy that applies to TeX’s use of any personal data supplied by associates.
What happens to existing commercial agreements that members already have in place?
Existing agreements (and any future agreements) will be superseded but only to the extent that they deal with electronic and manual re-registration. For example, if you have agreed service levels for re-registration that are of a lower standard than the service levels in the SLA, they will be superseded by the service levels in the SLA – if you have agreed better service levels, those will be unaffected. Any commercial arrangements will continue to apply, such as the payment of any fees between the parties in relation to a transfer.
How can the Membership Agreement be changed?
- Any changes to the Articles of Association will need the consent of at least 75% of the voting members of TeX: this is a legal requirement under the Companies Act 2006.
- The following changes can be made only with the approval of 75% of the membership (the “Membership Approval Process”):
- Changing any part of the Contract Terms or the service levels.
- Changing the standards (ie a change from ISO 20022 to a new ISO standard, not an upgrade to the ISO 20022 standard).
- Introducing any new fees.
- Increasing the fees in any 12-month period above indexation (ie 10% more than any % increase in the Consumer Price Index).
- Changing the basis on which the joining fee or membership fee is calculated (fees are currently calculated on a flat-rate basis).
- All other parts of the Membership Agreement can be amended using the “Membership Notification Process”, but the board always has the discretion to implement any proposed change via the Membership Approval Process instead, if it wants to ensure a change is supported by the majority of members.
The By-laws suggest that a whole of category of members could be excluded from voting on changes – when is this likely to happen?
If will only happen if the Board determines that a category of member is not affected by a proposed change and therefore that category of member is not entitled to vote on that change. While the Board has the right to do this, it is not expected to be used often and it is not a decision that the Board would exercise lightly. We anticipate that the board would seek external advice before excluding a category of member from voting.
How much notice will we get of changes?
The board will give members at least 3 months’ notice of a change, unless the board considers it necessary to invoke an accelerated change procedure with a shorter notice period for more urgent changes.
What happens if I don’t agree with a change?
If a change is implemented, then that change will apply to all members. If you rejected the change and no longer want to be part of the club as a result of the change, you have the right to resign at any time by giving TeX at least 5 business days’ written notice. This will terminate your Membership Agreement and means that you will no longer have a contractual relationship with each of the other participants in the club: your firm would need to put in place its own agreements with the relevant other parties.
TeX membership fees
There are two fees payable for TeX membership, a joining fee and an annual membership fee.
What is the TeX joining fee?
The TeX joining fee is a one-off fee of £6,000 (£5,000 plus £1,000 VAT) for all individual entities or corporate groups intending to register with TeX and move towards electronic messaging to facilitate transfers.
The joining fee is payable when a company submits a completed TeX joining form.
What are the annual membership fees for TeX?
There are four types of annual membership fee for TeX for full TeX members.
Annual membership fees payable are dependent on the membership category of the firm registering with TeX:
- Service Provider £4,080 (£3,400 plus £680 VAT)
- Product provider (exceptions)
- ISA manager
- Platform service provider (as defined by FCA)
- Asset Manager £2,724 (£2,270 plus £454 VAT)
- A firm responsible for the maintenance of a fund’s register of holders and repurchasing of units that are to be redeemed
- Fund manager offering an ISA wrapper including only their own funds
- Multi-Role Member £6,804 (£5,670 plus £1,134 VAT)
- Both a service provider and an asset manager
- Pension Provider – This registration is free to all members who currently have an active membership under the above listed categories. If you are not currently registered the annual fee for this category is £2,724 (£2,270 plus £454 VAT).
- A party responsible for the provision and administration of a Pension Scheme
- If one is appointed for the relevant Pension Scheme, the Pension Administrator
The first annual membership fee is payable when a company submits a completed TeX registration form.
If a company has none of the appropriate permissions and does not have a contractual relationship with any underlying client, they can apply to be an associate.
What are Associates?
If a company is not a service provider, asset manager, pension provider or multi-role member they would become Associates.
Associates do not sign up to the legal terms as the firm does not carry liability for the underlying client, but do sign up to a side letter which includes terms on Confidentiality, Liabilities and Termination, the glossary and Associate Privacy & Competition Policies.
Associates are able to join any of the Advisory Councils but do not have the right to vote on any issue.
The fees for Associates are a £2,400 (£2,000 plus £400 VAT) one-off joining fee and a £1,356 (£1,130 plus £226 VAT) annual membership fee payable when a company submits a completed appointment letter.
Does each company registering need to pay an annual membership fee?
In this example, one joining fee of £6000 would be payable on behalf of the corporate group (ABC Group) with five annual membership fees payable, 2 for marketing group A, 1 for marketing group B and 2 for marketing group C. This pension registration is free to all members who currently have another active membership under one of the other categories. Otherwise the standalone annual fee for this category is £2,724 (£2,270 plus £454 VAT).
When is the TeX membership year?
The TeX membership year runs from 1st July to 30th June.
What is the process for ongoing annual membership fees?
Invoices will be issued annually on 1st May for the next membership year.
All invoices are payable by 30th June to ensure continued TeX membership, any invoices not paid in full by 30th June may result in termination of TeX membership.
