TeX Legal Documents

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: (i) 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 (ii) 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.

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.

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.

Associates do not sign up to the same terms as members of TeX. To become an Associate, an organisation enters into a standard associate letter of appointment with TeX and that letter sets out the terms that apply to the associate. The main obligations of an associate are:

(a) to pay the joining fee and annual associate fee;
(b) to comply with the Competition Policy; and
(c) to compy 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.

The benefits granted to an associate are subject to the associate’s compliance with its obligations under the letter. A material breach by the associate (eg failure to comply with the Competition Policy) would give TeX the right to terminate the associate’s letter of appointment with immediate effect. Tex also has the right to terminate the letter of appointment at any time for any reason, but where this does not arise from any fault on the part of the associate the firm will continue to have rights as an associate until the end of that year of associateship.

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.

The TeX board will set up Advisory Councils and working groups or other groups as needed from time to time to consider changes and make proposals to the Board. Members will be entitled to propose changes. It is expected that changes will generally be aggregated and implemented once each year, except in respect of the SLA, which is likely to be updated more frequently.

The change process that applies will depend on which part of the Membership Agreement is being amended.

• 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”):
  • (a) Changing any part of the Contract Terms or the service levels.
  • (b) Changing the standards (ie a change from ISO 20022 to a new ISO standard, not an upgrade to the ISO 20022 standard).
  • (c) Introducing any new fees.
  • (d) Increasing the fees in any 12-month period above indexation (ie 10% more than any % increase in the Consumer Price Index).
  • (e) 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.

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.

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.

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.