Financial Services and Markets Act 2023

• (d) provide for the listing or admission to trading on a regulated market of existing securities in class 2 modified by that or any other write-down instrument ....

• (4) The reference in sub-paragraph (1) to converting securities from one form or class into another includes creating a new security in connection with the modification of an existing security.

• (5) In sub-paragraph (3) any reference to a class of securities is to be construed in accordance with paragraph 40.

• (6) The provision that may be made under sub-paragraph (3)(a) includes, for example—

• (a) provision that specified rights attaching to securities are to be treated as having been exercised;

• (b) provision that the Bank is to be treated as authorised to exercise specified rights attaching to securities;

• (c) provision that specified rights attaching to securities may not be exercised for a period specified in the instrument.

• (7) In sub-paragraph (3)—

• (a) the reference to “listing” is to listing under section 74 of FSMA 2000, and

• (b) “regulated market” has the meaning given in section 103(1) of FSMA 2000.

• (8) Where the listing of securities is suspended in accordance with a write-down instrument, those securities are to be treated for the purposes of section 96 of, and paragraph 23(6) of Schedule 1ZA to, FSMA 2000 as still being listed.

• (9) The provision that may be made under this paragraph in relation to any securities is in addition to any provision that the Bank may have power to make in relation to them under paragraph 34.

Report on provisions in write-down instrument

36

• (1) This paragraph applies to a relevant provision in a write-down instrument.

• (2) The Bank must report to the Chancellor of the Exchequer stating the reasons why that provision has been made in the case of the securities or liabilities concerned.

• (3) If the provision departs from the insolvency treatment principles, the report must state the reasons why it does so.

• (4) The insolvency treatment principles are that where an instrument includes a relevant provision—

• (a) the provision made by the instrument must be consistent with treating existing claims in respect of the CCP’s shares and all the liabilities of the CCP in accordance with the priority they would enjoy on a liquidation, and

• (b) any creditors who would have equal priority on a liquidation are to bear losses on an equal footing with each other.

• (5) A report must comply with any other requirements as to content that may be specified by the Treasury.

• (6) A report must be made as soon as reasonably practicable after the making of the instrument to which it relates.

• (7) The Chancellor of the Exchequer must lay a copy of each report under sub-paragraph (2) before Parliament.

• (8) In this paragraph a “relevant provision” means a provision falling within paragraph 34(2).

Priority between creditors

37

• (1) The Treasury may, for the purpose of ensuring that the treatment of any claims in respect of a CCP’s shares or any liabilities in any write-down instrument is aligned to an appropriate degree with the treatment of claims and liabilities on an insolvency, by regulations specify matters or principles to which the Bank is to be required to have regard in making any such instrument.

• (2) Regulations under this paragraph may for example—

• (a) specify the insolvency treatment principles (as defined in paragraph 36(4)) or alternative principles;

• (b) specify the meaning of “insolvency” for one or more purposes of the regulations.

• (3) Regulations under this paragraph may amend paragraph 36(4).

• (4) Regulations under this paragraph are subject to the affirmative procedure.

Power to take control

38

• (1) The eighth stabilisation option is for the Bank to make one or more instruments of control.

• (2) An instrument of control is an instrument that makes any of the following provision —

• (a) provision transferring any voting rights exercisable by shareholders of the CCP or, if the CCP is an unincorporated association, members of the CCP to the Bank for a specified period;

• (b) provision transferring specified powers, rights, duties or liabilities of the directors or senior managers of the CCP to the Bank for a specified period.

• (3) Provision made under sub-paragraph (2) may for example include—

• (a) provision for exemptions or applying modifications in relation to any powers, rights, duties or liabilities transferred;

• (b) provision for the Bank to exercise such powers, rights, duties or liabilities under the CCP’s rules as may be specified in the instrument;

• (c) provision for the Bank to exercise such powers, rights, duties or liabilities in relation to any contracts that the CCP is a party to as may be specified in the instrument.

Shadow directors etc

39

• (1) This paragraph applies where the Bank uses one or more of the stabilisation options mentioned in paragraph 1(3) in respect of a CCP unless the CCP has ceased to be subject to the exercise of any stabilisation power mentioned in paragraph 1(4).

• (2) A relevant person is not to be treated in relation to the CCP—

• (a) as a shadow director for the purposes of the relevant enactments,

• (b) as a person who discharges managerial responsibilities for the purposes of those enactments (unless that person has been appointed as a director or a senior manager), or

• (c) as a director within the meaning of section 417(1)(b) of FSMA 2000 (a person in accordance with whose directions or instructions the directors of a body corporate are accustomed to act).

• (3) In this paragraph—

• “relevant enactment” means— the Companies Act 2006; the Insolvency Act 1986; the Company Directors Disqualification Act 1986; FSMA 2000; the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)); the Company Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/3150 (N.I. 4));

• “relevant person” means— the Bank, persons who are employed by, or act on behalf of, the Bank, and a temporary manager appointed under paragraph 6 of this Schedule.

Interpretation: “securities”

40

• (1) In this Schedule “securities” includes anything falling within any of the following classes.

• (2) Class 1: shares and stock.

• (3) Class 2: debentures, including—

• (a) debenture stock,

• (b) loan stock,

• (c) bonds,

• (d) certificates of deposit, and

• (e) any other instrument creating or acknowledging a debt.

• (4) Class 3: warrants or other instruments that entitle the holder to acquire anything in Class 1 or 2.

Share transfer instrument

41

• (1) A share transfer instrument is for purposes of this Schedule an instrument which—

• (a) provides for securities issued by a specified CCP to be transferred;

• (b) makes other provision for the purposes of, or in connection with, the transfer of securities issued by a specified CCP (whether or not the transfer has been or is to be effected by that instrument, by another share transfer instrument or otherwise).

• (2) A share transfer instrument may relate to—

• (a) specified securities, or

• (b) securities of a specified description.

Effect

42

• (1) In this paragraph “transfer” means a transfer provided for by a share transfer instrument.

• (2) A transfer takes effect by virtue of the instrument (and in accordance with its provisions as to timing or other ancillary matters).

• (3) A transfer takes effect despite any restriction arising by virtue of contract or legislation or in any other way.

• (4) In sub-paragraph (3) “restriction” includes—

• (a) any restriction, inability or incapacity affecting what can or cannot be assigned or transferred (whether generally or by a particular person), and

• (b) a requirement for consent (by any name).

• (5) A share transfer instrument may provide for a transfer to take effect free from any trust, liability or other encumbrance (and may include provision about their extinguishment).

• (6) A share transfer instrument may extinguish rights to acquire securities falling within Class 1 or 2 in paragraph 40.

Continuity

43

• (1) A share transfer instrument may provide for a transferee to be treated for any purpose connected with the transfer as the same person as the transferor.

• (2) A share transfer instrument may provide for agreements made or other things done by or in relation to a transferor to be treated as made or done by or in relation to the transferee.

• (3) A share transfer instrument may provide for anything (including legal proceedings) that relates to anything transferred and is in the process of being done by or in relation to the transferor immediately before the transfer date, to be continued by or in relation to the transferee.

• (4) A share transfer instrument may modify references (express or implied) in an instrument or document to a transferor.

• (5) A share transfer instrument may require or permit—

• (a) a transferor to provide a transferee with information and assistance;

• (b) a transferee to provide a transferor with information and assistance.

Conversion and delisting

44

• (1) A share transfer instrument may provide for securities to be converted from one form or class to another.

• (2) A share transfer instrument may provide for the listing of securities, under section 74 of FSMA 2000, to be discontinued or suspended.

• (3) Where the listing of securities is suspended in accordance with a share transfer instrument, those securities are to be treated for the purposes of section 96 of, and paragraph 23(6) of Schedule 1ZA to, FSMA 2000 as still being listed.

Directors and senior managers

45

• (1) A share transfer instrument may enable the Bank—

• (a) to remove a director or senior manager of a specified CCP;

• (b) to vary the service contract of a director or senior manager of a specified CCP;

• (c) to terminate the service contract of a director or senior manager of a specified CCP;

• (d) to appoint a director or a senior manager of a specified CCP.

• (2) Sub-paragraph (1) also applies to a director or senior manager of a relevant CCP group company of the specified CCP.

• (3) A “relevant CCP group company” means a CCP group company that is incorporated in, or formed under the law of any part of, the United Kingdom.

• (4) Appointments under sub-paragraph (1)(d) are to be on terms and conditions agreed with the Bank.

Ancillary instruments: production, registration, etc

46

• (1) A share transfer instrument may permit or require the execution, issue or delivery of an instrument.

• (2) A share transfer instrument may provide for a transfer to have effect irrespective of —

• (a) whether an instrument has been produced, delivered, transferred or otherwise dealt with;

• (b) registration.

• (3) A share transfer instrument may provide for the effect of an instrument executed, issued or delivered, in accordance with the instrument.

• (4) A share transfer instrument may modify or annul the effect of an instrument.

• (5) A share transfer instrument may—

• (a) entitle a transferee to be registered in respect of transferred securities;

• (b) require a person to effect registration.

Incidental provision

47

• (1) A share transfer instrument may include incidental, consequential or transitional provision.

• (2) In relying on sub-paragraph (1) a share transfer instrument—

• (a) may make provision generally or only for specified purposes, cases or circumstances, and

• (b) may make different provision for different purposes, cases or circumstances.

Procedure: instruments

48

• (1) As soon as is reasonably practicable after making a share transfer instrument in respect of a CCP, the Bank must send a copy to—

• (a) the CCP,

• (b) the Treasury,

• (c) if the CCP is a PRA-authorised person, the PRA,

• (d) the FCA, and

• (e) any other person specified in the code of practice under paragraph 16.

• (2) As soon as is reasonably practicable after making share transfer instrument the Bank must publish a copy—

• (a) on the Bank’s website,

• (b) in at least one other medium chosen by the Bank to maximise the likelihood of the instrument coming to the attention of persons likely to be affected by it, and

• (c) if securities of the CCP have been admitted to trading on a regulated market (within the meaning of section 103(1) of FSMA 2000), by means of a regulatory information service (within the meaning of section 313D of that Act),

and arrange for the publication of a copy on the website of the CCP in respect of which the instrument was made.

• (3) Where the Treasury receive a copy of a share transfer instrument under sub-paragraph (1) they must lay a copy before Parliament.

Supplemental instruments

49

• (1) This paragraph applies where the Bank has made a share transfer instrument, in respect of securities issued by a CCP, in accordance with paragraph 27(2), 29(3) or 30(2) (“the original instrument”).

• (2) The Bank may make one or more supplemental share transfer instruments.

• (3) A supplemental share transfer instrument is a share transfer instrument which—

• (a) provides for the transfer of securities which were issued by the CCP before the original instrument and have not been transferred by the original instrument or another supplemental share transfer instrument;

• (b) makes provision of a kind that a share transfer instrument may make under paragraph 41(1)(b) (whether or not in connection with a transfer under the original instrument).

• (4) Paragraphs 17 and 19 do not apply to a supplemental share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes, including for the purposes of the application of a power under this Schedule).

• (5) Before making a supplemental share transfer instrument the Bank must consult—

• (a) if the CCP is a PRA-authorised person, the PRA,

• (b) the FCA, and

• (c) the Treasury.

• (6) The possibility of making a supplemental share transfer instrument in reliance on sub-paragraph (2) is without prejudice to the possibility of making a new instrument in accordance with paragraphs 27(2), 29(3) and 30(2) (and not in reliance on sub-paragraph (2) above).

• (7) Paragraph 48 applies where the Bank has made a supplemental share transfer instrument.

Onward transfer

50

• (1) This paragraph applies where the Bank has made a share transfer instrument, in respect of securities issued by a CCP, in accordance with paragraph 27(2), 29(3) or 30(2) (“the original instrument”).

• (2) The Bank may make one or more onward share transfer instruments.

• (3) An onward share transfer instrument is a share transfer instrument which—

• (a) provides for the transfer of—

• (i) securities which were issued by the CCP before the original instrument and have been transferred by the original instrument or a supplemental share transfer instrument, or

• (ii) securities which were issued by the CCP after the original instrument;

• (b) makes other provision for the purposes of, or in connection with, the transfer of securities issued by the CCP (whether the transfer has been or is to be effected by that instrument, by another share transfer instrument or otherwise).

• (4) An onward share transfer instrument may not transfer securities to the transferor under the original instrument.

• (5) The Bank may not make an onward share transfer instrument unless the transferee under the original instrument is—

• (a) the Bank,

• (b) a nominee of the Treasury, or

• (c) a company wholly owned by the Bank or the Treasury.

• (6) Paragraphs 17 and 19 do not apply to an onward share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes, including for the purposes of the application of a power under this Schedule).

• (7) Before making an onward share transfer instrument the Bank must consult—

• (a) if the CCP is a PRA-authorised person, the PRA, and

• (b) the FCA.

• (8) Paragraph 48 applies where the Bank has made an onward share transfer instrument.

Reverse share transfer

51

• (1) This paragraph applies where the Bank has made a share transfer instrument in accordance with paragraph 27(2), 29(3) or 30(2) (“the original instrument”) providing for the transfer of securities issued by a CCP to a person (“the original transferee”).

• (2) The Bank may make one or more reverse share transfer instruments in respect of securities issued by the CCP and held by the original transferee (whether or not they were transferred by the original instrument).

• (3) If the Bank makes an onward share transfer instrument in respect of securities transferred by the original instrument, the Bank may make one or more reverse share transfer instruments in respect of securities issued by the CCP and held by a transferee under the onward share transfer instrument (“the onward transferee”).

• (4) A reverse share transfer instrument is a share transfer instrument which—

• (a) provides for transfer to the transferor under the original instrument (where sub-paragraph (2) applies);

• (b) provides for transfer to the original transferee (where sub-paragraph (3) applies);

• (c) makes other provision for the purposes of, or in connection with, the transfer of securities which are, could be or could have been transferred under paragraph (a) or (b).

• (5) The Bank may not make a reverse share transfer instrument under sub-paragraph (2) unless—

• (a) the original transferee is—

• (i) the Bank,

• (ii) a company wholly owned by the Bank or the Treasury, or

• (iii) a nominee of the Treasury, or

• (b) the reverse share transfer instrument is made with the written consent of the original transferee.

• (6) The Bank may not make a reverse share transfer instrument under sub-paragraph (3) unless—

• (a) the onward transferee is—

• (i) the Bank,

• (ii) a company wholly owned by the Bank or the Treasury, or

• (iii) a nominee of the Treasury, or

• (b) the reverse share transfer instrument is made with the written consent of the onward transferee.

• (7) Paragraphs 17 and 19 do not apply to a reverse share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes including for the purposes of the application of a power under this Schedule).

• (8) Before making a reverse share transfer instrument the Bank must consult—

• (a) if the CCP is a PRA-authorised person, the PRA, and

• (b) the FCA.

• (9) Paragraph 48 applies where the Bank has made a reverse share transfer instrument.

Bridge central counterparties: share transfers

52

• (1) This paragraph applies where the Bank has made a property transfer instrument or share transfer instrument in respect of a bridge central counterparty in accordance with paragraph 29(3) (“the original instrument”).

• (2) The Bank may make one or more bridge central counterparty share transfer instruments.

• (3) A bridge central counterparty share transfer instrument is a share transfer instrument which—

• (a) provides for securities issued by the bridge central counterparty to be transferred;

• (b) makes other provision for the purposes of, or in connection with, the transfer of securities issued by the bridge central counterparty (whether the transfer has been or is to be effected by that instrument, by another share transfer instrument or otherwise).

• (4) Paragraphs 17 and 19 do not apply to a bridge central counterparty share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes, including for the purposes of the application of a power under this Schedule).

• (5) Before making a bridge central counterparty share transfer instrument the Bank must consult—

• (a) if the CCP is a PRA-authorised person, the PRA,

• (b) the FCA, and

• (c) the Treasury.

• (6) Paragraph 48 applies where the Bank has made a bridge central counterparty share transfer instrument.

Bridge central counterparties: reverse share transfer

53

• (1) This paragraph applies where the Bank has made a bridge central counterparty share transfer instrument in accordance with paragraph 52(2) (“the original instrument”).

• (2) The Bank may make one or more bridge central counterparty reverse share transfer instruments in respect of securities issued by the bridge central counterparty and held by a transferee under the original instrument.

• (3) A bridge central counterparty reverse share transfer instrument is a share transfer instrument which—

• (a) provides for transfer to the transferor under the original instrument;

• (b) makes other provision for the purposes of, or in connection with, the transfer of securities which are, could be or could have been transferred under paragraph (a).

• (4) The Bank must not make a bridge central counterparty reverse share transfer instrument unless—

• (a) the transferee under the original instrument is—

• (i) a company wholly owned by the Bank,

• (ii) a company wholly owned by the Treasury, or

• (iii) a nominee of the Treasury, or

• (b) the bridge central counterparty reverse share transfer instrument is made with the written consent of the transferee under the original instrument.

• (5) Paragraphs 17 and 19 do not apply to a bridge central counterparty reverse share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes including for the purposes of the application of a power under this Schedule).

• (6) Before making a bridge central counterparty reverse share transfer instrument the Bank must consult—

• (a) if the CCP is a PRA-authorised person, the PRA,

• (b) the FCA, and

• (c) the Treasury.

• (7) Paragraph 48 applies where the Bank has made a bridge central counterparty reverse share transfer instrument.

Property transfer instrument

54

• (1) A property transfer instrument is an instrument which—

• (a) provides for property, rights or liabilities of a specified CCP to be transferred;

• (b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities of a specified CCP (whether the transfer has been or is to be effected by that instrument, by another property transfer instrument or otherwise).

• (2) A property transfer instrument may relate to—

• (a) all property, rights and liabilities of the specified CCP,

• (b) all its property, rights and liabilities subject to specified exceptions,

• (c) specified property, rights or liabilities, or

• (d) property, rights or liabilities of a specified description.

Injunctions to prevent failure to comply with relevant requirement

55

• (1) In this paragraph “transfer” means a transfer provided for by a property transfer instrument.

• (2) A transfer takes effect by virtue of the instrument (and in accordance with its provisions as to timing or other ancillary matters).

• (3) A transfer takes effect despite any restriction arising by virtue of contract or legislation or in any other way.

• (4) In sub-paragraph (3) “restriction” includes—

• (a) any restriction, inability or incapacity affecting what can and cannot be assigned or transferred (whether generally or by a particular person), and

• (b) a requirement for consent (by any name).

• (5) A property transfer instrument may provide for a transfer to be conditional upon a specified event or situation—

• (a) occurring or arising, or

• (b) not occurring or arising.

• (6) A property transfer instrument may include provision dealing with the consequences of breach of a condition imposed under sub-paragraph (5); and the consequences may include—

• (a) automatic vesting in the original transferor;

• (b) an obligation to effect a transfer back to the original transferor, with specified consequences for failure to comply (which may include provision conferring a discretion on a court or tribunal);

• (c) provision making a transfer or anything done in connection with a transfer void or voidable.

• (7) Where a property transfer instrument makes provision in respect of property held on trust (however arising) it may also make provision about—

• (a) the terms on which the property is to be held after the instrument takes effect, and

• (b) how any powers, rights or obligations in respect of the property are to be exercisable or have effect after the instrument takes effect.

• (8) Provision under sub-paragraph (7)(a) may remove or alter the terms of the trust on which the property is held only to the extent that the Bank thinks it necessary or expedient for the purpose of transferring—

• (a) the legal or beneficial interest of the transferor in the property;

• (b) any powers, rights or obligations of the transferor in respect of the property.

• (9) In sub-paragraph (8) references to the transferor are references to the transferor under the property transfer instrument.

Transferable property

56

A property transfer instrument may transfer any property, rights or liabilities including, in particular—

• (a) property, rights and liabilities acquired or arising between the making of the instrument and the transfer date,

• (b) rights and liabilities arising on or after the transfer date in respect of matters occurring before that date,

• (c) property outside the United Kingdom,

• (d) rights and liabilities under the law of a country or territory outside the United Kingdom, and

• (e) rights and liabilities under an enactment.

Continuity

57

• (1) A property transfer instrument may provide—

• (a) for a transfer to be, or to be treated as, a succession;

• (b) for a transferee to be treated for any purpose connected with the transfer as the same person as the transferor.

• (2) A property transfer instrument may provide for agreements made or other things done by or in relation to a transferor to be treated as made or done by or in relation to the transferee.

• (3) A property transfer instrument may provide for anything (including legal proceedings) that relates to anything transferred and is in the process of being done by or in relation to the transferor immediately before the transfer date, to be continued by or in relation to the transferee.

• (4) A property transfer instrument which transfers or enables the transfer of a contract of employment may include provision about continuity of employment.

• (5) A property transfer instrument may modify references (express or implied) in an instrument or document to a transferor.

• (6) In so far as rights and liabilities in respect of anything transferred are enforceable after transfer, a property transfer instrument may provide for apportionment between transferor and transferee to a specified extent and in specified ways.

• (7) A property transfer instrument may enable the transferor and transferee by agreement to modify a provision of the instrument; but a modification—

• (a) must achieve a result that could have been achieved by the instrument, and

• (b) may not transfer (or arrange for the transfer of) property, rights or liabilities.

• (8) A property transfer instrument may require or permit—

• (a) a transferor to provide a transferee with information and assistance;

• (b) a transferee to provide a transferor with information and assistance.

Directors and senior managers

58

• (1) A property transfer instrument may enable the Bank—

• (a) to remove a director or senior manager of a specified CCP;

• (b) to vary the service contract of a director or senior manager of a specified CCP;

• (c) to terminate the service contract of a director or senior manager of a specified CCP;

• (d) to appoint a director or senior manager of a specified CCP.

• (2) Sub-paragraph (1) also applies to a director or senior manager of a relevant CCP group company of the specified CCP.

• (3) A “relevant CCP group company” means a CCP group company incorporated in, or formed under the law of any part of, the United Kingdom.

• (4) Appointments under sub-paragraph (1)(d) are to be on terms and conditions agreed with the Bank.

Recognised central counterparty rules

59

• (1) A property transfer instrument made in respect of a CCP may make provision about the consequences of a transfer for the rules of the CCP.

• (2) In particular, an instrument may—

• (a) modify or amend the rules of a CCP;

• (b) in a case where some, but not all, of the business of a CCP is transferred, make provision as to the application of the rules in relation to the parts of the business that are, and are not, transferred.

• (3) Provision by virtue of this paragraph may (but need not) be limited so as to have effect—

• (a) for a specified period, or

• (b) until a specified event occurs or does not occur.

Recognised central counterparty membership

60

• (1) A property transfer instrument made in respect of a CCP may make provision about the consequences of a transfer for membership of the CCP.

• (2) In particular, an instrument may—

• (a) make provision modifying the terms on which a person is a clearing member of a CCP;

• (b) in a case where some, but not all, of the business of a CCP is transferred, provide for a person who was a clearing member of the transferor to remain a clearing member of the transferor while also becoming a clearing member of the transferee.

Licences

61

• (1) A licence in respect of anything transferred by a property transfer instrument continues to have effect despite the transfer.

• (2) A property transfer instrument may disapply sub-paragraph (1) to a specified extent.

• (3) Where a licence imposes rights or obligations, a property transfer instrument may apportion responsibility for exercise or compliance between transferor and transferee.

• (4) In this paragraph “licence” includes permission and approval and any other permissive document in respect of anything transferred.

Foreign property

62

• (1) This paragraph applies where a property transfer instrument transfers foreign property.

• (2) In sub-paragraph (1) “foreign property” means—

• (a) property outside the United Kingdom, or

• (b) rights and liabilities under foreign law.

• (3) The transferor and the transferee must each take any necessary steps to ensure that the transfer is effective as a matter of foreign law (if it is not wholly effective by virtue of the property transfer instrument).

• (4) Until the transfer is effective as a matter of foreign law, the transferor must—

• (a) hold the property or right for the benefit of the transferee (together with any additional property or right accruing by virtue of the original property or right), or

• (b) discharge the liability on behalf of the transferee.

• (5) If the Bank determines that, in spite of any action taken by the transferee or the transferor, it is not possible for the transfer of certain property to be effective under the law of the jurisdiction where the property is located or (where the property consists of rights or liabilities) the law under which it arises—

• (a) sub-paragraph (4) ceases to apply, and

• (b) the provisions of the property transfer instrument relating to that property are void.

• (6) The Bank must give notice of any determination under sub-paragraph (5) to the transferor and the transferee.

• (7) The transferor must meet any expenses of the transferee in complying with this paragraph.

• (8) An obligation imposed by this paragraph is enforceable as if created by contract between the transferor and transferee.

• (9) The transferor must comply with any directions of the Bank in respect of the obligations under sub-paragraphs (3) and (4); and—

• (a) a direction may disapply sub-paragraphs (3) and (4) to a specified extent, and

• (b) obligations imposed by direction are enforceable as if created by contract between the transferor and the Bank.

• (10) In this paragraph “foreign law” means the law of a country or territory outside the United Kingdom.

Incidental provision

63

• (1) A property transfer instrument may include incidental, consequential or transitional provision.

• (2) In relying on sub-paragraph (1) an instrument—

• (a) may make provision generally or only for specified purposes, cases or circumstances, and

• (b) may make different provision for different purposes, cases or circumstances.

Procedure

64

• (1) As soon as is reasonably practicable after making a property transfer instrument in respect of a CCP, the Bank must send a copy to—

• (a) the CCP,

• (b) the Treasury,

• (c) if the CCP is a PRA-authorised person, the PRA,

• (d) the FCA, and

• (e) any other person specified in the code of practice under paragraph 16.

• (2) As soon as is reasonably practicable after making a property transfer instrument the Bank must publish a copy—

• (a) on the Bank’s website,

• (b) in at least one other medium chosen by the Bank to maximise the likelihood of the instrument coming to the attention of persons likely to be affected, and

• (c) if securities of the CCP have been admitted to trading on a regulated market (within the meaning of section 103(1) of FSMA 2000), by means of a regulatory information service (within the meaning of section 313D of that Act),

and arrange for the publication of a copy on the website of the CCP in respect of which the instrument was made.

• (3) Where the Treasury receive a copy of a property transfer instrument under sub-paragraph (1) they must lay a copy before Parliament.

Property transfer instrument: delisting

65

• (1) A property transfer instrument may provide for the listing of securities, under section 74 of FSMA 2000, to be discontinued or suspended.

• (2) Where the listing of securities is suspended in accordance with a property transfer instrument, those securities are to be treated for the purposes of section 96 of, and paragraph 23(6) of Schedule 1ZA to, FSMA 2000 as still being listed.

Transfer of property subsequent to resolution instrument

66

• (1) This paragraph applies where the Bank has made a resolution instrument.

• (2) The Bank may make one or more property transfer instruments in respect of property, rights or liabilities of the CCP.

• (3) Paragraph 17 does not apply to a property transfer instrument under sub-paragraph (2).

• (4) Before making a property transfer instrument under sub-paragraph (2) the Bank must consult—

• (a) if the CCP is a PRA-authorised person, the PRA,

• (b) the FCA, and

• (c) the Treasury.

Supplemental instruments

67

• (1) This paragraph applies where the Bank has made a property transfer instrument in accordance with paragraph 27(2) or 29(3) (“the original instrument”).

• (2) The Bank may make one or more supplemental property transfer instruments.

• (3) A supplemental property transfer instrument is a property transfer instrument which—

• (a) provides for property, rights or liabilities to be transferred from the transferor under the original instrument (whether accruing or arising before or after the original instrument);

• (b) makes other provision of a kind that an original property transfer instrument may make under paragraph 54(1)(b) (whether in connection with a transfer under the original instrument or in connection with a transfer under that or another supplemental instrument).

• (4) Paragraphs 17 and 19 do not apply to a supplemental property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes, including for the purposes of the application of a power under this Schedule).

• (5) Before making a supplemental property transfer instrument the Bank must consult—

• (a) if the CCP is a PRA-authorised person, the PRA,

• (b) the FCA, and

• (c) the Treasury.

• (6) The possibility of making a supplemental property transfer instrument in reliance on sub-paragraph (2) is without prejudice to the possibility of making a new instrument in accordance with paragraph 27(2) or 29(3) (and not in reliance on sub-paragraph (2) above).

• (7) Paragraph 64 applies where the Bank has made a supplemental property transfer instrument.

Private sector purchaser: reverse property transfer

68

• (1) This paragraph applies where the Bank has made a property transfer instrument in accordance with paragraph 27(2) (“the original instrument”) providing for the transfer of property, rights or liabilities of a CCP to a person (“the original transferee”).

• (2) The Bank may make one or more private sector reverse property transfer instruments in respect of property, rights or liabilities of the original transferee.

• (3) A private sector reverse property transfer instrument is a property transfer instrument which—

• (a) provides for transfer to the transferor under the original instrument;

• (b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities that are, could be or could have been transferred under paragraph (a) (whether the transfer has been or is to be effected by that instrument or otherwise).

• (4) The Bank must not make a private sector reverse property transfer instrument without the written consent of the original transferee.

• (5) Paragraphs 17 and 19 do not apply to a private sector reverse property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes including for the purposes of the application of a power under this Schedule).

• (6) Before making a private sector reverse property transfer instrument the Bank must consult—

• (a) if the CCP is a PRA-authorised person, the PRA,

• (b) the FCA, and

• (c) the Treasury.

• (7) Paragraph 64 applies where the Bank has made a private sector reverse property transfer instrument.

Onward transfer

69

• (1) This paragraph applies where the Bank has made a property transfer instrument in respect of a bridge central counterparty in accordance with paragraph 29(3) (“the original instrument”).

• (2) The Bank may make one or more onward property transfer instruments.

• (3) An onward property transfer instrument is a property transfer instrument which—

• (a) provides for property, rights or liabilities of the bridge central counterparty to be transferred (whether accruing or arising before or after the original instrument);

• (b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities of the bridge central counterparty (whether the transfer has been or is to be effected by that instrument, by another property transfer instrument or otherwise).

• (4) An onward property transfer instrument may relate to property, rights or liabilities of the bridge central counterparty whether or not they were transferred under the original instrument.

• (5) An onward property transfer instrument may not transfer property, rights or liabilities to the transferor under the original instrument.

• (6) Paragraphs 17 and 19 do not apply to an onward property transfer instrument (but for other purposes it is to be treated in the same way as any other property transfer instrument, including for the purposes of the application of a power under this Schedule).

• (7) Before making an onward property transfer instrument the Bank must consult—

• (a) if the CCP is a PRA-authorised person, the PRA

• (b) the FCA, and

• (c) the Treasury.

• (8) Paragraph 64 applies where the Bank of England has made an onward property transfer instrument.

Bridge central counterparties: reverse property transfer

70

• (1) This paragraph applies where the Bank has made a property transfer instrument in accordance with paragraph 29(3) (“the original instrument”) providing for the transfer of property, rights or liabilities to a bridge central counterparty.

• (2) The Bank may make one or more bridge central counterparty reverse property transfer instruments in respect of property, rights or liabilities of the bridge central counterparty.

• (3) If the Bank makes an onward property transfer instrument under paragraph 69 the Bank may make one or more reverse property transfer instruments in respect of property, rights or liabilities of a transferee under the onward property transfer instrument (“the onward transferee”).

• (4) A bridge central counterparty reverse property transfer instrument is a property transfer instrument which—

• (a) provides for transfer to the transferor under the original instrument (where sub-paragraph (2) applies);

• (b) provides for transfer to the bridge central counterparty (where sub-paragraph (3) applies);

• (c) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities that are, could be or could have been transferred under paragraph (a) or (b) (whether the transfer has been or is to be effected by that instrument or otherwise).

• (5) The Bank must not make a bridge central counterparty reverse property transfer instrument unless—

• (a) the onward transferee is—

• (i) a company wholly owned by the Bank,

• (ii) a company wholly owned by the Treasury, or

• (iii) a company wholly owned by a nominee of the Treasury, or

• (b) the bridge central counterparty reverse property transfer is made with the written consent of the onward transferee.

• (6) Paragraphs 17 and 19 do not apply to a bridge central counterparty reverse property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes including for the purposes of the application of a power under this Schedule).

• (7) Before making a bridge central counterparty reverse property transfer instrument the Bank must consult—

• (a) if the CCP is a PRA-authorised person, the PRA,

• (b) the FCA, and

• (c) the Treasury.

• (8) Paragraph 64 applies where the Bank has made a bridge central counterparty reverse property transfer instrument.

Transfer of ownership and private sector purchaser: property transfer

71

• (1) This paragraph applies where the Bank has made a share transfer instrument, in respect of securities issued by a CCP, in accordance with paragraph 27(2) or 30(2) (“the original instrument”).

• (2) The Bank may make one or more property transfer instruments.

• (3) A property transfer instrument is an instrument which—

• (a) provides for property, rights or liabilities of the CCP to be transferred (whether accruing or arising before or after the original instrument);

• (b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities of the CCP (whether the transfer has been or is to be effected by the instrument or otherwise).

• (4) The Bank may not make a property transfer instrument in accordance with this paragraph unless the original instrument transferred securities to—

• (a) the Bank,

• (b) a company wholly owned by the Bank or the Treasury, or

• (c) a nominee of the Treasury.

• (5) Paragraphs 17 and 19 do not apply to a property transfer instrument made in accordance with this paragraph.

• (6) Before making a property transfer instrument in accordance with this paragraph, the Bank must consult—

• (a) if the CCP is a PRA-authorised person, the PRA, and

• (b) the FCA.

• (7) Paragraph 64 applies where the Bank has made a property transfer instrument in accordance with this paragraph.

Transfer of ownership: reverse property transfer

72

• (1) This paragraph applies where the Bank has made a property transfer instrument in accordance with paragraph 71(2) (“the original instrument”).

• (2) The Bank may make one or more reverse property transfer instruments in respect of property, rights and liabilities of the transferee under the original instrument.

• (3) A reverse property transfer instrument is a property transfer instrument which—

• (a) provides for transfer to the transferor under the original instrument;

• (b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities which are, could be or could have been transferred.

• (4) The Bank must not make a reverse property transfer instrument unless—

• (a) the transferee under the original instrument is—

• (i) the Bank,

• (ii) a company wholly owned by the Bank or the Treasury, or

• (iii) a nominee of the Treasury, or

• (b) the reverse property transfer instrument is made with the written consent of the transferee under the original instrument.

• (5) Paragraphs 17 and 19 do not apply to a reverse property transfer instrument made in accordance with this paragraph.

• (6) Before making a reverse property transfer instrument in accordance with this paragraph, the Bank must consult—

• (a) if the CCP is a PRA-authorised person, the PRA, and

• (b) the FCA.

• (7) Paragraph 64 applies where the Bank has made a reverse property transfer instrument in accordance with this paragraph.

Bridge central counterparty: supplemental property transfer powers

73

• (1) This paragraph applies where the Bank has made a share transfer instrument in accordance with paragraph 29(3) (“the original instrument”) providing for the transfer of securities issued by a CCP (“the CCP”) to a bridge central counterparty.

• (2) The Bank may make one or more property transfer instruments in relation to the CCP (“bridge central counterparty supplemental property transfer instruments”).

• (3) A bridge central counterparty supplemental property transfer instrument is an instrument which—

• (a) provides for property, rights or liabilities of the CCP to be transferred (whether accruing or arising before or after the original instrument);

• (b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities of the CCP (whether the transfer has been or is to be effected by the instrument or otherwise).

• (4) Paragraphs 17 and 19 do not apply to a bridge central counterparty supplemental property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes including for the purposes of the application of a power under this Schedule).

• (5) Before making a bridge central counterparty supplemental property transfer instrument the Bank must consult—

• (a) if the CCP is a PRA-authorised person, the PRA,

• (b) the FCA, and

• (c) the Treasury.

• (6) The possibility of making a bridge central counterparty supplemental property transfer instrument in reliance on sub-paragraph (2) is without prejudice to the possibility of making a property transfer instrument in accordance with paragraph 29(3) (and not in reliance on sub-paragraph (2) above).

• (7) Paragraph 64 applies where the Bank has made a bridge central counterparty supplemental property transfer instrument.

Bridge central counterparty: supplemental reverse property transfer powers

74

• (1) This paragraph applies where the Bank has made a bridge central counterparty supplemental property transfer instrument in accordance with paragraph 73 (“the original instrument”).

• (2) The Bank may make one or more reverse property transfer instruments (“bridge central counterparty supplemental reverse property transfer instruments”) in respect of property, rights or liabilities of the transferee under the original instrument.

• (3) A bridge central counterparty supplemental reverse property transfer instrument is an instrument which—

• (a) provides for transfer to the transferor under the original instrument;

• (b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities which are, could be or could have been transferred under paragraph (a) (whether the transfer has been or is to be effected by that instrument or otherwise).

• (4) Paragraphs 17 and 19 do not apply to a bridge central counterparty supplemental reverse property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes including for the purposes of the application of a power under this Schedule).

• (5) The Bank must not make a bridge central counterparty supplemental reverse property transfer instrument unless—

• (a) the transferee under the original instrument is—

• (i) a company wholly owned by the Bank of England,

• (ii) a company wholly owned by the Treasury, or

• (iii) a nominee of the Treasury, or

• (b) it is made with the written consent of the transferee under the original instrument.

• (6) Before making a bridge central counterparty supplemental reverse property transfer instrument the Bank must consult—

• (a) if the CCP is a PRA-authorised person, the PRA,

• (b) the FCA, and

• (c) the Treasury.

• (7) Paragraph 64 applies where the Bank has made a bridge central counterparty supplemental property transfer instrument.

Restriction of partial transfers

75

• (1) In this Schedule, “partial property transfer” means a property transfer instrument which provides for the transfer of some, but not all of the property, rights and liabilities of a CCP.

• (2) The Treasury may by regulations—

• (a) restrict the making of partial property transfers;

• (b) impose conditions on the making of partial property transfers;

• (c) require partial property transfers to include specified provision or provision to a specified effect;

• (d) provide for a partial property transfer to be void or voidable, or for other consequences (including automatic transfer of other property, rights or liabilities) to arise, if or in so far as the partial property transfer is made or purported to be made in contravention of a provision of the regulations.

• (3) Regulations under this paragraph may apply to partial property transfers generally or only to partial property transfers—

• (a) of a specified kind, or

• (b) made or applying in specified circumstances.

• (4) Provision under sub-paragraph (2) may, in particular, refer to particular classes of liabilities.

• (5) Regulations under this paragraph are subject to the affirmative procedure.

Power to protect certain interests

76

• (1) In this paragraph—

• (a) “security interests” means arrangements under which one person acquires, by way of security, an actual or contingent interest in the property of another,

• (b) “title transfer collateral arrangements” are arrangements under which Person 1 transfers assets to Person 2 on terms providing for Person 2 to transfer assets if specified obligations are discharged,

• (c) “set-off arrangements” are arrangements under which two or more debts, claims or obligations can be set off against each other,

• (d) “netting arrangements” are arrangements under which a number of claims or obligations can be converted into a net claim or obligation and include, in particular, “close-out” netting arrangements, under which actual or theoretical debts are calculated during the course of a contract for the purpose of enabling them to be set off against each other or to be converted into a net debt, and

• (e) “protected arrangements” means security interests, title transfer collateral arrangements, set-off arrangements and netting arrangements.

• (2) The Treasury may by regulations —

• (a) restrict the making of partial property transfers in cases that involve, or where they might affect, protected arrangements;

• (b) impose conditions on the making of partial property transfers in cases that involve, or where they might affect, protected arrangements;

• (c) require partial property transfers to include specified provision, or provision to a specified effect, in respect of or for purposes connected with protected arrangements;

• (d) provide for a partial property transfer to be void or voidable, or for other consequences (including automatic transfer of other property, rights or liabilities) to arise, if or in so far as the partial property transfer is made or purported to be made in contravention of a provision of the regulations.

• (3) Regulations under this paragraph may apply to protected arrangements generally or only to arrangements—

• (a) of a specified kind, or

• (b) made or applying in specified circumstances.

• (4) Regulations under this paragraph may include provision for determining which arrangements are to be, or not to be, treated as protected arrangements; in particular, regulations may provide for arrangements to be classified not according to their description by the parties but according to one or more indications of how they are treated, or are intended to be treated, in commercial practice.

• (5) In this paragraph “arrangements” includes arrangements which—

• (a) are formed wholly or partly by one or more contracts or trusts;

• (b) arise under or are wholly or partly governed by the law of a country or territory outside the United Kingdom;

• (c) wholly or partly arise automatically as a matter of law;

• (d) involve any number of parties;

• (e) operate partly by reference to other arrangements between other parties.

• (6) Regulations under this paragraph are subject to the affirmative procedure.

Creation of liabilities

77

• (1) The provision that may be made by a property transfer instrument in reliance on paragraph 54(1)(b), 67(3)(b), 68(3)(b), 69(3)(b), 70(4)(c), 71(3)(b), 72(3)(b), 73(3)(b), or 74(3)(b) includes provision for the creation of liabilities.

• (2) The provision may be framed by reference to an agreement which has been or is to be entered into, or anything else which has been or is to be done, by any person (including a person other than the person making the instrument).

Regulations for safeguarding certain financial arrangements: write-down instruments

78

• (1) In this paragraph “protected arrangements” means security interests, title transfer collateral arrangements, set-off arrangements and netting arrangements.

• (2) In sub-paragraph (1)—

• (a) “security interests” means arrangements under which one person acquires, by way of security, an actual or contingent interest in the property of another,

• (b) “title transfer collateral arrangements” are arrangements under which Person 1 transfers assets to Person 2 on terms providing for Person 2 to transfer assets if specified obligations are discharged,

• (c) “set-off arrangements” are arrangements under which two or more debts, claims or obligations can be set off against each other, and

• (d) “netting arrangements” are arrangements under which a number of claims or obligations can be converted into a net claim or obligation and include, in particular, “close-out” netting arrangements, under which actual or theoretical debts are calculated during the course of a contract for the purpose of enabling them to be set off against each other or to be converted into a net debt.

• (3) The Treasury may by regulations —

• (a) restrict the making of a write-down instrument in cases that involve, or where they might affect, protected arrangements;

• (b) impose conditions on the making of write-down instruments in cases that involve, or where they might affect, protected arrangements;

• (c) require write-down instruments to include specified provision, or provision to a specified effect, in respect of or for purposes connected with protected arrangements;

• (d) provide for a write-down instrument to be void or voidable, or for other consequences to arise, if or in so far as the write-down instrument is made or purported to be made in contravention of a provision of the regulations;

• (e) specify principles to which the Bank is to be required to have regard in making a write-down instrument—

• (i) that involves protected arrangements, or

• (ii) where the making of the instrument might affect protected arrangements.

• (4) Regulations under this paragraph may apply to protected arrangements generally or only to arrangements—

• (a) of a specified kind, or

• (b) made or applying in specified circumstances.

• (5) Regulations under this paragraph may include provision for determining which arrangements are to be, or not to be, treated as protected arrangements; in particular, regulations may provide for arrangements to be classified not according to their description by the parties but according to one or more indications of how they are treated, or are intended to be treated, in commercial practice.

• (6) In this paragraph “arrangements” includes arrangements which—

• (a) are formed wholly or partly by one or more contracts or trusts;

• (b) arise under or are wholly or partly governed by the law of a country or territory outside the United Kingdom;

• (c) wholly or partly arise automatically as a matter of law;

• (d) involve any number of parties;

• (e) operate partly by reference to other arrangements between other parties.

• (7) Regulations under this paragraph are subject to the affirmative procedure.

Resolution instruments: effect and supplementary matters

79

• (1) In this Schedule “resolution instrument” means—

• (a) a cash call instrument;

• (b) a tear-up instrument;

• (c) a variation instrument;

• (d) a write-down instrument;

• (e) an instrument of control.

• (2) A resolution instrument must be made in writing.

• (3) A resolution instrument in respect of a CCP ceases to have effect on whichever of the following occurs first—

• (a) such date as may be specified in the instrument,

• (b) the making of a share transfer instrument or a property transfer instrument in relation to the CCP, or

• (c) any of the conditions under paragraph 17 ceasing to be met in relation to the CCP.

• (4) The Bank may at any time amend a resolution instrument to specify or amend a date for the purposes of sub-paragraph (3)(a).

• (5) Before amending a resolution instrument in accordance with sub-paragraph (4) the Bank must consult the Treasury.

• (6) Provision made in a resolution instrument takes effect despite any restriction arising by virtue of contract or legislation or in any other way.

• (7) A resolution instrument may provide for anything (including legal proceedings) that relates to anything affected by the instrument and is in the process of being done immediately before the instrument takes effect to be continued from the time the instrument takes effect.

• (8) A resolution instrument may modify references (express or implied) in an instrument or document.

• (9) A resolution instrument may require or permit any person to provide information and assistance to the Bank or another person, for the purposes of or in connection with provision made or to be made in that or another resolution instrument.

• (10) A resolution instrument—

• (a) may include supplemental, incidental, consequential or transitional provision,

• (b) may make provision generally or only for specified purposes, cases or circumstances,

• (c) may make different provision for different purposes, cases or circumstances, and

• (d) may make provision for exemptions.

• (11) A resolution instrument ceasing to have effect does not affect the validity of anything previously done in accordance with it.

Write-down instruments: supplementary

80

• (1) A write-down instrument may permit or require the execution, issue or delivery of an instrument.

• (2) A write-down instrument may provide for any provision in the instrument to have effect irrespective of—