Update

Member Services

	Standardised Documentation

The first suite of documents, the Private Customer Terms, are currently being reviewed by the participating firms. These will be followed by the Wholesale Market Counterparty Terms and then finally by the Intermediate Customer Terms.

As members will be aware from the previous Update, the final documentation will:

- include the three sets of customer terms together with explanatory notes for each set of terms,
- cover the following product range:

- equity and fixed income products;
- exchange-traded and OTC financial and commodity derivatives (including forwards);
- foreign exchange cash and options;
- contracts for differences (including those that are equity related);
- EFPs;
- bullion.

- contain all mandatory UK regulatory requirements (i.e. it will be N2 compliant);
- set out the main commercial terms expected to be included in IT sensitive agreements (including those necessary for the purpose of defining the rights and obligations of customers utilising electronic order routing services);
- include an agency annex for fund managers/mandate for authorising discretionary agents to trade on behalf of underlying customers;
- include "e-commerce friendly" relevant terms concerning e-signature rules, disclaimers, limitations of liability etc;
- include, where necessary, terms required by the following exchanges: LIFFE, Eurex, LME, IPE, OMLX, Euronext, LSE, CBOT, and CME.

The suite of standardised documents will also include the FOA Master Netting Agreement, the Collateral Annex (although the Collateral Annex will be available only to FOA Netting participants who have subscribed to it) and "know your customer" and money laundering checklists (with guidance).

The documentation will be cleared for use in the following jurisdictions and include, if applicable, specific terms required by the following overseas authorities:

. * any additional US terms will be based, in the case of SEC regulated dealings, on the assumption that firms will only be dealing with US customers via a US-registered broker-dealer. It will also include the CFTC Part 30 required terms for futures transactions.

	Standardised Documentation (continued)

The FOA can cover the necessary additional terms for other jurisdictions, but this would be the subject of an additional fee which would be charged out separately to interested participants on a pooled cost basis, similar to the approach adopted in relation to the FOA's Master Netting Project as regards the inclusion of Phase 2 and Phase 3 legal opinions.

For firms still wishing to join the project, the cost is £10K per firm.

Post N2, the suite of documents will be updated regularly to reflect any future regulatory UK, EU or International developments. This service will be subject to a "pooled cost" annual fee to cover legal and administration costs.

If you would like to participate in the FOA's Standardised Documentation Project please contact Hugo Jenkins at the FOA

	Guidelines on the Procurement/Outsourcing of IT Systems/Services

As IT Procurement/Outsourcing becomes more and more common, whether to facilitate exchange access or to delegate a major part of the business process to a third party, so the selection and management of the supplier as well as the resulting regulatory obligations become ever more critical. To this end, the FOA is planning to produce a set of guidelines covering the following:

- How to conduct a rigorous due diligence exercise prior to selecting an appropriate supplier.
- What should be essential elements of the contractual arrangements with the supplier - service levels (service elements, targets, breach remedies etc.), termination provisions, dispute resolution, indemnities, warranties, etc.
- What practical steps firms should take to ensure that they could fulfil the regulatory obligations that stem from the procurement/outsourcing of IT systems/services. This would include how to satisfy particular exchange requirements.

The FOA will complete the selection process for their project partner in early February. Once this has been done, the project will commence with the final delivery of the guidelines planned for June.

If you would like to find out more about this initiative, please contact Hugo Jenkins at the FOA.