Legalize / United Kingdom / Public General Act

Financial Services and Markets Act 2023

Type Public General Act

Publication 2023-06-29

Last updated 2026-04-06

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

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

(b) registration.

(3) A write-down instrument may provide for the effect of an instrument executed, issued or delivered in accordance with the instrument.

(4) A write-down instrument may—

(a) entitle a person to be registered in respect of a security;

(b) require a person to effect registration.

Resolution instruments: procedure

81

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

(a) the CCP,

(b) the Treasury,

(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 resolution 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 resolution instrument under sub-paragraph (1) they must lay a copy before Parliament.

Supplemental resolution instruments

82

(1) This paragraph applies where the Bank has made a resolution instrument (“the original instrument”) with respect to a CCP.

(2) The Bank may make, with respect to the CCP, one or more resolution instruments designated by the Bank as supplemental resolution instruments.

(3) Paragraphs 17, 22 and 79(3)(c) do not apply to a supplemental resolution instrument (but it is to be treated in the same way as a resolution instrument for all other purposes, including for the purposes of the application of a power under this Schedule).

(4) Before making a supplemental resolution instrument, the Bank must consult—

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

(b) the FCA, and

(5) The possibility of making a supplemental resolution instrument in reliance on sub-paragraph (2) is without prejudice to the possibility of making a new resolution instrument in accordance with paragraphs 31(1), 32(1), 33(1), 34(1) and 38(1) (and not in reliance on sub-paragraph (2) above).

Directors and senior managers

83

(1) A resolution 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;

(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” is 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.

Termination rights etc

84

(1) In this paragraph—

“resolution measure” means— the making by the Bank of a stabilisation instrument in relation to a CCP, where an instrument of control under paragraph 38 is in place in relation to a CCP, the exercise by the Bank of any relevant rules of the CCP, a measure taken by a CCP as a result of directions given under paragraph 2, the removal by a CCP of a director or senior manager as a result of a requirement imposed under paragraph 5, the appointment of a temporary manager in relation to a CCP under paragraph 6, a restriction or prohibition on payments under paragraph 13 or 102, the recognition by the Bank of third-country resolution action (or part of such action) in accordance with Part 7 of this Schedule, or the exercise by the Bank of a stabilisation power by virtue of paragraph 146(3);

“default event provision” means a Type 1 or Type 2 default event provision (see sub-paragraphs (2) and (3));

“relevant rules”, in relation to a CCP, mean rules ensuring that the requirements under paragraph 29A or 36 of the Schedule to the Financial Services and Markets Act 2000 (Recognition Requirements for Investment Exchanges, Clearing Houses and Central Securities Depositories) Regulations 2001 (S.I. 2001/995) are met;

“stabilisation instrument” means— a share transfer instrument, a property transfer instrument, or a resolution instrument.

(2) A Type 1 default event provision is a provision of a contract or other agreement that has the effect that if a specified event occurs or situation arises—

(a) the agreement is terminated, modified or replaced,

(b) rights or duties under the agreement are terminated, modified or replaced,

(d) a right accrues to terminate, modify or replace rights or duties under the agreement,

(e) a sum becomes payable or ceases to be payable,

(f) delivery of anything becomes due or ceases to be due,

(g) a right to claim a payment or delivery accrues, changes or lapses,

(h) any other right accrues, changes or lapses,

(i) a right to accelerate, close out, set-off or net obligations accrues, changes or lapses, or

(j) an interest is created, changes or lapses.

(3) A Type 2 default event provision is a provision of a contract or other agreement that has the effect that a provision of the contract or agreement—

(a) takes effect only if a specified event occurs or does not occur,

(b) takes effect only if a specified situation arises or does not arise,

(d) has effect only while a specified situation lasts,

(e) applies differently if a specified event occurs,

(f) applies differently if a specified situation arises, or

(g) applies differently while a specified situation lasts.

(4) For the purposes of sub-paragraphs (2) and (3) it is the effect of a provision that matters, not how it is described (nor, for example, whether it is presented in a positive or a negative form).

(5) Subject to sub-paragraph (7), sub-paragraph (6) applies where—

(a) a contract or agreement is entered into by a CCP, and

(b) the substantive obligations provided for in the contract or agreement (including payment and delivery obligations and provision of collateral) continue to be performed.

(6) The following are to be disregarded in determining whether a default event provision applies—

(a) a resolution measure, and

(b) the occurrence of any event directly linked to the application of such a measure.

(7) A stabilisation instrument may provide for sub-paragraph (6)—

(a) not to apply in relation to a contract or other agreement, or

(b) to apply in relation to a contract or other agreement only to the extent specified by the Bank in the instrument.

(8) Provision may be made under sub-paragraph (7) only if the Bank considers that such provision would advance one or more of the special resolution objectives.

(9) A stabilisation instrument may provide for sub-paragraph (10) or (11) to apply (but need not apply either) in circumstances where sub-paragraph (6) would not apply.

(10) If this sub-paragraph applies, the stabilisation instrument is to be disregarded in determining whether a default event provision applies.

(11) If this sub-paragraph applies, the stabilisation instrument is to be disregarded in determining whether a default event provision applies except so far as the instrument provides otherwise.

(12) In sub-paragraphs (9), (10) and (11) a reference to a stabilisation instrument is a reference to—

(a) the making of the instrument,

(b) anything that is done by the instrument or is to be, or may be, done under or by virtue of the instrument, and

(c) any action or decision taken or made under this or another enactment in so far as it resulted in, or was connected to, the making of the instrument.

(13) Provision under sub-paragraph (9) may apply sub-paragraph (10) or (11)—

(a) generally or only for specified purposes, cases or circumstances, or

(b) differently for different purposes, cases or circumstances.

(14) A thing is not done by virtue of a stabilisation instrument for the purposes of sub-paragraph (12)(b) merely by virtue of being done under a contract or other agreement rights or obligations under which have been affected by the instrument.

Deferment

85

(1) The Treasury may by regulations make provision for and in connection with the suspension or waiver of provisions made under a resolution instrument.

(2) The following are examples of provision that may be made by regulations under this paragraph—

(a) provision specifying matters to which the Bank must have regard before suspending or waiving provisions under a resolution instrument;

(b) provision specifying the procedure for suspending or waiving such provisions;

(d) provision for review of any suspension or waiver of provisions under a resolution instrument.

(3) Regulations under this paragraph are subject to the negative procedure.

Recovery of expenses

86

(1) The Bank may, in making a resolution instrument, share transfer instrument or property transfer instrument in relation to a CCP, direct that CCP to pay the Bank a specified fee to cover expenses reasonably incurred by the Bank in connection with exercising that option.

(2) The Treasury may direct a CCP in relation to which the Bank has made a resolution instrument, share transfer instrument or property transfer instrument to pay the Treasury a specified fee to cover expenses reasonably incurred by the Treasury in connection with the exercise by the Bank of that power in relation to the CCP.

Compensation scheme

87

(1) The Treasury may by regulations make provision for protecting the financial interests of relevant persons in connection with the making of a stabilisation instrument in respect of a CCP.

(2) For the purposes of sub-paragraph (1) regulations may make provision establishing a scheme, which may for example include provision—

(a) for determining whether relevant persons should be paid compensation or providing for relevant persons to be paid compensation;

(b) for paying any compensation (including payments in instalment or subject to terms and conditions);

(c) under which specified relevant persons become entitled to the proceeds of disposal of things transferred under a share transfer instrument or property transfer instrument.

(3) In making regulations under this paragraph the Treasury must have regard (among other matters) to the desirability of ensuring that any person who is a relevant person before the making of a stabilisation instrument does not receive less favourable treatment than they would have received had—

(a) the CCP entered insolvency immediately before the stabilisation instrument was made, and

(b) all the relevant rules of the CCP been applied in the period leading up to the insolvency.

(4) The regulations may provide for the amount of compensation payable to relevant persons to be determined by a person appointed in accordance with the regulations (an “independent valuer”).

(5) The regulations may make such further provision about independent valuers as the Treasury consider to be appropriate, including (among other things)—

(a) provision about appointment and tenure,

(b) provision for remuneration of independent valuers and their staff,

(d) provision specifying principles to be applied by independent valuers to determine the amount of compensation,

(e) provision about the procedure to be followed by independent valuers,

(f) provision about the liability of independent valuers, and

(g) provision about appeals against decisions by independent valuers (including conferring jurisdiction on a court or tribunal).

(6) The regulations may provide for compensation or other payments to be made by—

(a) the Treasury, or

(b) any other specified persons.

(7) In this paragraph—

references to “insolvency” include a reference to— liquidation, administration, receivership, a composition with creditors, and a scheme of arrangement;

“relevant person”, in relation to a CCP, means— clearing members of the CCP; creditors of the CCP; shareholders of the CCP; clients within the meaning of Article 2 of EMIR where they have a contractual relationship as principal with the CCP.

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

Instruments: notification of members and creditors

88

(1) This paragraph applies where the Bank has applied one or more of the stabilisation options in respect of a CCP.

(2) Except where securities issued by the CCP have been admitted to trading on a regulated market (within the meaning given in section 103(1) of FSMA 2000), the Bank must send a copy of any property transfer instrument, share transfer instrument or resolution instrument made in respect of the CCP to each of the following persons who are known to the Bank—

(a) the CCP’s shareholders or, if the CCP is an unincorporated association, its members, and

(b) creditors of the CCP.

General continuity obligation: property transfers

89

(1) In this paragraph—

(a) “residual CCP” means a CCP all or part of whose business has been transferred under a property transfer instrument in accordance with paragraph 27(2), 29(3), 66(2) or 73(2),

(b) “group company” means anything which is, or was immediately before the transfer, a group undertaking in relation to a residual CCP,

(d) “the transferred business” means the part of the CCP’s business that has been transferred, and

(e) “transferee” means a commercial purchaser or bridge central counterparty to whom all or part of the transferred business has been transferred.

(2) In this paragraph a reference to insolvency includes a reference to liquidation, administration, receivership, composition with creditors and a scheme of arrangement.

(3) The residual CCP and each group company must provide such services and facilities as are required to enable a transferee to operate the transferred business, or part of it, effectively.

(4) The duty under sub-paragraph (3) (the “continuity obligation”) may be enforced as if created by contract between the residual CCP or group company and the transferee.

(5) The continuity obligation continues to apply despite the residual CCP or group company entering insolvency, and may not be disclaimed by a liquidator under section 178(2) of the Insolvency Act 1986 or Article 152(1) of the Insolvency (Northern Ireland) Order 1989.

(6) The duty to provide services and facilities in pursuance of the continuity obligation is subject to a right to receive reasonable consideration.

(7) But if the services and facilities provided in pursuance of the continuity obligation were provided to the CCP whose business has been transferred, under an agreement with that CCP, before the property transfer instrument providing for the transfer was made, they are to continue for the duration of that agreement to be provided on the terms set out in that agreement (and sub-paragraph (6) does not apply).

(8) The continuity obligation is not limited to the provision of services or facilities directly to a transferee.

(9) The Bank may, with the consent of the Treasury, by notice to the residual CCP or a group company state that in the Bank’s opinion—

(a) specified activities are required to be undertaken in accordance with the continuity obligation;

(b) activities are required to be undertaken in accordance with the continuity obligation on specified terms.

(10) A notice under sub-paragraph (9) is to be determinative of the nature and extent of the continuity obligation as from the time when the notice is given.

Special continuity obligations: property transfers

90

(1) Expressions in this paragraph have the same meaning as in paragraph 89.

(2) The Bank may—

(a) cancel a contract or other arrangement between the residual CCP and a group company or a third party (whether or not rights or obligations under it have been transferred to a transferee);

(b) modify the terms of a contract or other arrangement between the residual CCP and a group company or a third party (whether or not rights or obligations under it have been transferred to a transferee);

(c) add or substitute a transferee as a party to a contract or other arrangement between the residual CCP and a group company or a third party;

(d) confer and impose rights and obligations on a group company or third party and a transferee, which must have effect as if created by contract between them;

(e) confer and impose rights and obligations on the residual CCP and a transferee which must have effect as if created by contract between them.

(3) In modifying or setting terms under sub-paragraph (2) the Bank must aim, so far as is reasonably practicable, to preserve or include—

(a) provision for reasonable consideration, and

(b) any other provision that would be expected in arrangements concluded between parties dealing at arm’s length.

(4) The power under sub-paragraph (2)—

(a) may be exercised only in so far as the Bank thinks it necessary to ensure the provision of such services and facilities as are required to enable the transferee to operate the transferred business, or part of it, effectively,

(b) may be exercised only with the consent of the Treasury, and

(5) An obligation imposed on the residual CCP or a group company under sub-paragraph (2)(d) or (e) continues to apply despite the residual CCP or group company entering insolvency, and may not be disclaimed by a liquidator under section 178(2) of the Insolvency Act 1986 or Article 152(1) of the Insolvency (Northern Ireland) Order 1989.

Continuity obligations: onward property transfers

91

(1) In this paragraph—

(a) “onward transfer” means a transfer of property, rights or liabilities (whether or not under a power in this Schedule) from—

(i) a person who is a transferee under a property transfer instrument under paragraph 29(3) (an “original transferee”), or

(ii) a CCP, securities issued by which were earlier transferred by a share transfer instrument under paragraph 29(3) or 30(2), and

(b) the person to whom the onward transfer is made is referred to as an “onward transferee”.

(2) The Bank may—

(a) provide for an obligation under paragraph 89 to apply in respect of an onward transferee;

(b) extend paragraph 90 so as to permit action to be taken under paragraph 90(2) for the purpose of enabling an onward transferee to operate the transferred business, or part of it, effectively.

(3) Sub-paragraph (2) may be relied on to impose obligations on—

(a) an original transferee (where the original transfer was a property transfer),

(b) a residual CCP within the meaning of paragraph 89 (where the original transfer was a property transfer),

(d) anything which is or was a group undertaking (within the meaning of section 1161(5) of the Companies Act 2006) of anything within paragraphs (a) to (c), or

(e) any combination of the above.

(4) Sub-paragraph (2) may be used to impose obligations—

(a) in addition to obligations under or by virtue of paragraph 89 or 90, or

(b) replacing obligations under or by virtue of either of those paragraphs to a specified extent.

(5) A power under sub-paragraph (2) is exercisable by giving a notice to each person—

(a) on whom a continuity obligation is to be imposed under the power, or

(b) who is expected to benefit from a continuity obligation under the power.

(6) Paragraphs 89(3) to (10) and 90(3) and (4) apply to an obligation as applied under sub-paragraph (2)—

(a) construing “transferred business” as the business transferred by means of the onward transfer, and

(b) with any other necessary modification.

(7) The Bank may act under or by virtue of sub-paragraph (2) only with the consent of the Treasury.

92

(1) In this paragraph and paragraph 93—

(a) “transferred CCP” means a CCP all or part of the ownership of which has been transferred in accordance with paragraph 27(2), 29(3), or 30(2),

(b) “former group company” means anything which was a group undertaking in relation to the transferred CCP immediately before the transfer (whether or not it is also a group undertaking in relation to the transferred CCP immediately after the transfer),

(2) In this paragraph a reference to insolvency includes a reference to liquidation, administration, receivership, composition with creditors and a scheme of arrangement.

(3) Each former group company must provide such services and facilities as are required to enable the transferred CCP to operate effectively.

(4) The duty under sub-paragraph (3) (the “continuity obligation”) may be enforced as if created by contract between the transferred CCP and the former group company.

(5) The continuity obligation continues to apply despite the former group company entering insolvency, and may not be disclaimed by a liquidator under section 178(2) of the Insolvency Act 1986 or Article 152(1) of the Insolvency (Northern Ireland) Order 1989.

(6) The duty to provide services and facilities in pursuance of the continuity obligation is subject to a right to receive reasonable consideration.

(7) But if the services and facilities provided in pursuance of the continuity obligation were provided to the transferred CCP, under an agreement with that CCP, before the share transfer instrument providing for the transfer was made, they are to continue for the duration of that agreement to be provided on the terms set out in that agreement (and sub-paragraph (6) does not apply).

(8) The continuity obligation is not limited to the provision of services or facilities directly to the transferred CCP.

(9) The Bank may by notice to a former group company state that in the Bank’s opinion—

(a) specified activities are required to be undertaken in accordance with the continuity obligation;

(b) activities are required to be undertaken in accordance with the continuity obligation on specified terms.

(10) A notice under sub-paragraph (9) is to be determinative of the nature and extent of the continuity obligation as from the time when the notice is given.

(11) The Bank may act under or by virtue of sub-paragraph (9) only with the consent of the Treasury.

93

(1) Expressions in this paragraph have the same meaning as in paragraph 92.

(2) The Bank may—

(a) cancel a contract or other arrangement between the transferred CCP and a former group company or a third party;

(b) modify the terms of a contract or other arrangement between the transferred CCP and a former group company or a third party;

(c) confer and impose rights and obligations on a former group company or a third party and the transferred CCP, which has effect as if created by contract between them.

(3) In modifying or setting terms under sub-paragraph (2) the Bank must aim, so far as is reasonably practicable, to preserve or include—

(a) a provision for reasonable consideration, and

(b) any other provision that would be expected in arrangements concluded between parties dealing at arm’s length.

(4) The power under sub-paragraph (2)—

(a) may be exercised only in so far as the Bank thinks it necessary to ensure the provision of such services and facilities as are required to enable the transferred CCP to operate effectively,

(b) may be exercised by the Bank only with the consent of the Treasury, and

(5) An obligation imposed on the transferred CCP or a former group company under sub-paragraph (2)(b) or (c) continues to apply despite the transferred CCP or former group company entering insolvency, and may not be disclaimed by a liquidator under section 178(2) of the Insolvency Act 1986 or Article 152(1) of the Insolvency (Northern Ireland) Order 1989.

94

(1) In this paragraph “onward transfer” means a transfer (whether or not under a power in this Schedule) of securities issued by a CCP where—

(a) securities issued by the CCP were earlier transferred by a share transfer instrument under paragraph 29(3) or 30(2), or

(b) the CCP was the transferee under a property transfer instrument under paragraph 29(3).

(2) The Bank may—

(a) provide for an obligation under paragraph 92 to apply in respect of the CCP after the onward transfer;

(b) extend paragraph 93 so as to permit action to be taken under paragraph 93(2) to enable the CCP to operate effectively after the onward transfer.

(3) Sub-paragraph (2) may be relied on to impose obligations on—

(a) the CCP,

(b) anything which is or was a group undertaking (within the meaning of section 1161(5) of the Companies Act 2006) of the CCP,

(c) anything which is or was a group undertaking of the residual CCP (in a case to which sub-paragraph (1)(b) applies), or

(d) any combination of the above.

(4) Sub-paragraph (2) may be used to impose obligations—

(a) in addition to obligations under or by virtue of paragraph 92 or 93, or

(b) replacing obligations under or by virtue of either of those paragraphs to a specified extent.

(5) A power under sub-paragraph (2) is exercisable by giving a notice to each person—

(a) on whom a continuity obligation is to be imposed under the power, or

(b) who is expected to benefit from a continuity obligation under the power.

(6) Paragraphs 92(4) to (10) and 94(3) and (4) apply to an obligation as applied under sub-paragraph (2) with any necessary modification.

(7) The Bank may act under or by virtue of sub-paragraph (2) only with the consent of the Treasury.

Continuity obligations: consideration and terms

95

(1) The Treasury may by regulations specify matters which are to be or not to be considered in determining—

(a) what amounts to reasonable consideration for the purpose of paragraphs 89 to 94;

(b) what provisions to include in accordance with paragraph 90(3)(b) or 93(3)(b).

(2) The Bank may give guarantees or indemnities in respect of consideration for services or facilities provided or to be provided in pursuance of a continuity obligation.

(3) Regulations under this paragraph are subject to the negative procedure.

Continuity obligations: termination

96

(1) The Bank may by notice terminate an obligation arising under paragraph 89 or 92.

(2) The power under sub-paragraph (1) is exercisable by giving a notice to each person—

(a) on whom the obligation is imposed, or

(b) who has benefited or might have expected to benefit from the obligation.

(3) A reference in sub-paragraph (1) to obligations under a paragraph includes a reference to obligations under that paragraph as applied under paragraph 91 or 94.

Suspension of obligations

97

(1) Where the Bank is exercising a stabilisation power in respect of a CCP (a “CCP under resolution”) the Bank may suspend obligations to make a payment, or delivery, under a contract where one of the parties to the contract is the CCP under resolution.

(2) A suspension imposed under sub-paragraph (1) does not apply to—

(a) payments of eligible claims, or

(b) payments or deliveries to excluded persons (see paragraph 100).

(3) A suspension imposed under sub-paragraph (1)—

(a) begins when the instrument providing for the suspension is first published,

(b) must end no later than midnight at the end of the first business day following the day on which the instrument providing for the suspension is published, and

(c) subject to sub-paragraph (2), suspends all obligations to make a payment or delivery under the contract in question, whether the obligation concerned is that of the CCP under resolution or of any other party to the contract.

(4) Where a payment or delivery under the contract concerned first fell due within the period of the suspension, that payment or delivery is treated as being due immediately on the expiry of the suspension.

(5) The power under sub-paragraph (1) must be exercised by way of provision in a share transfer instrument, property transfer instrument, resolution instrument or third-country instrument.

(6) The Bank must have regard to the impact a suspension might have on the orderly functioning of the financial markets before exercising the power in sub-paragraph (1).

(7) In this paragraph, “eligible claim” means a claim in respect of which compensation is payable under the Financial Services Compensation Scheme.

Restriction of security interests

98

(1) Where the Bank is exercising a stabilisation power in respect of a CCP (a “CCP under resolution”) the Bank may suspend the rights of a secured creditor of the CCP to enforce any security interest the creditor has in relation to any assets of the CCP.

(2) A suspension under sub-paragraph (1)—

(a) begins when the instrument providing for the suspension is first published, and

(b) must end no later than midnight at the end of the first business day following the day on which that instrument is published.

(3) But the Bank may not suspend the rights of an excluded person to enforce any security interest that person may have in relation to any asset of the CCP under resolution which has been pledged or provided to the excluded person in question as collateral or as cover for margin.

(4) The power under sub-paragraph (1) must be exercised by way of provision in a share transfer instrument, property transfer instrument, resolution instrument or third-country instrument.

(5) Where the power in sub-paragraph (1) is being exercised in a partial property transfer, the Bank must ensure that any restrictions on the enforcement of security interests which it imposes under that sub-paragraph are applied consistently for all CCP group companies in respect of which the Bank is exercising a stabilisation power.

(6) The Bank must have regard to the impact a suspension might have on the orderly functioning of the financial markets before exercising the power in sub-paragraph (1).

(7) For the purposes of this paragraph, a “security interest” means an interest or right held for the purpose of securing the payment of money or the performance of any other obligation.

Suspension of termination rights

99

(1) The Bank may suspend the termination right of any party to a qualifying contract (other than a party who is an excluded person).

(2) A contract is a “qualifying contract” for the purpose of this paragraph if—

(a) one of the parties to the contract is a CCP in respect of which the Bank is exercising a stabilisation power (a “CCP under resolution”) and all the obligations under the contract to make a payment, make delivery or provide collateral continue to be performed, or

(b) one of the parties to the contract is a subsidiary of a CCP under resolution and the condition in sub-paragraph (3) is met.

(3) The condition is that—

(a) the obligations of the subsidiary are guaranteed or otherwise supported by the CCP under resolution,

(b) the termination rights under the contract are triggered by the insolvency or the financial condition of the CCP under resolution, and

(i) all the assets and liabilities relating to the contract have been or are being transferred to, or assumed by, a single transferee, or

(ii) the Bank is providing adequate protection for the performance of the obligations of the subsidiary under the contract in any other way.

(4) The Bank must have regard to the impact a suspension might have on the orderly functioning of the financial markets before exercising the power in sub-paragraph (1).

(5) The power under sub-paragraph (1) must be exercised by way of provision in a share transfer instrument, property transfer instrument, resolution instrument or third-country instrument.

(6) A suspension imposed under sub-paragraph (1)—

(a) begins when the instrument providing for the suspension is first published, and

(b) must end no later than midnight at the end of the first business day following the day on which that instrument is published.

(7) A person may exercise a termination right under a contract before the expiry of the suspension if that person is given notice by the Bank that the rights and liabilities of the CCP under resolution covered by the contract are not—

(a) to be transferred to another undertaking through the exercise of a stabilisation power, or

(b) to be made subject to a share transfer instrument, property transfer instrument, resolution instrument or third-country instrument.

(8) If—

(a) no notice has been given by the Bank under sub-paragraph (7), and

(b) a termination right has been triggered otherwise than through the exercise of a stabilisation power or the imposition of a suspension under sub-paragraph (1) (or the occurrence of an event directly linked to the exercise of a stabilisation power),

a person may, on the expiry of the suspension, exercise the termination right in accordance with the terms of the contract.

(9) But, where the rights and liabilities of the CCP under resolution or the subsidiary under the contract have been transferred to another undertaking, sub-paragraph (8) applies only if the event giving rise to the termination right has been triggered by that undertaking.

(10) For the purposes of this paragraph, “termination right” means—

(a) a right to terminate a contract,

(b) a right to accelerate, close out, set-off or net obligations, or any similar provision that suspends, modifies or extinguishes an obligation of a party to the contract, or

Suspension: general provision

100

For the purposes of paragraphs 97 to 99—

“business day” means any day other than a Saturday, a Sunday, or a day which is a bank holiday under the Banking and Financial Dealings Act 1971 in any part of the United Kingdom;

“excluded person” means— a person who has been declared to be, or who is an operator of, a designated system under regulation 4 of the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 (S.I. 1999/2979), a CCP, a third-country central counterparty (within the meaning given by section 285 of FSMA 2000), or a central bank.

Stay on terminating membership

101

(1) This paragraph applies where the Bank has made a resolution instrument, share transfer instrument or a property transfer instrument in relation to a CCP.

(2) A clearing member of the CCP may not at any time during the relevant period terminate their membership of the CCP.

(3) The “relevant period” for the purposes of sub-paragraph (2) is the period of 48 hours beginning with the time the instrument in question comes into force.

(4) A resolution instrument, share transfer instrument or property transfer instrument in relation to a CCP may provide for sub-paragraph (2)—

(a) not to apply in relation to clearing members of the CCP, or

(b) to apply in relation to clearing members of the CCP only to the extent specified by the Bank in the instrument.

(5) Provision may be made under sub-paragraph (4) only if the Bank considers that such provision would advance one or more of the special resolution objectives.

Restriction on remuneration

102

(1) The Bank may restrict or prohibit for a specified period discretionary payments to specified employees or specified shareholders of a CCP.

(2) The power under sub-paragraph (1) must be exercised by way of provision in a share transfer instrument, property transfer instrument or resolution instrument.

(3) The specified period for the purposes of sub-paragraph (1) must not exceed 5 years (but this is subject to sub-paragraph (4)).

(4) A provision under sub-paragraph (1) restricting or prohibiting discretionary payments in relation to a CCP ceases to have effect if—

(a) any of the conditions under paragraph 17 cease to be met in relation to the CCP, and

(b) the Bank is satisfied that following the exercise of any of the stabilisation powers in relation to the CCP, the CCP has sufficient resources to pay compensation and repay any public funds in connection with the exercise of those powers.

(5) In this paragraph—

“discretionary payments” has the meaning given in paragraph 13;

“specified” means specified in the instrument under sub-paragraph (2).

Pensions

103

(1) This paragraph applies to—

(a) share transfer instruments, and

(b) property transfer instruments.

(2) An instrument may make provision—

(a) about the consequences of a transfer for a pension scheme;

(b) about property, rights and liabilities of any pension scheme of the CCP.

(3) In particular, an instrument may—

(a) modify any rights and liabilities,

(b) apportion rights and liabilities, or

(4) Provision by virtue of this paragraph may (but need not) amend the terms of a pension scheme.

(5) A share or property transfer instrument may make provision in reliance on this paragraph only with the consent of the Treasury.

(6) In this paragraph—

(a) “pension scheme” includes any arrangement for the payment of pension, allowances and gratuities, and

(b) a reference to a pension scheme of a CCP is a reference to a scheme in respect of which the CCP, or a CCP group company, is or was an employer.

Disputes

104

(1) This paragraph applies to—

(a) share transfer instruments,

(b) property transfer instruments,

(d) third-country instruments.

(2) An instrument may include provision for disputes to be determined in a specified manner.

(3) Provision by virtue of sub-paragraph (2) may, in particular—

(a) confer jurisdiction on a court or tribunal;

(b) confer discretion on a specified person.

Tax

105

(1) The Treasury may by regulations make provision about the fiscal consequences of the exercise of a stabilisation power.

(2) Regulations may relate to—

(a) capital gains tax,

(b) corporation tax,

(d) inheritance tax,

(e) stamp duty,

(f) stamp duty land tax, or

(g) stamp duty reserve tax.

(3) Regulations may apply to—

(a) anything done in connection with an instrument,

(b) things transferred or otherwise affected by virtue of an instrument,

(d) persons otherwise affected by an instrument.

(4) Regulations may—

(a) modify or disapply an enactment;

(b) provide for an action to have or not have specified consequences;

(c) provide for specified classes of property (including securities), rights or liabilities to be treated, or not treated, in a specified way;

(d) withdraw or restrict a relief;

(e) extend, restrict or otherwise modify a charge to tax;

(f) provide for matters to be determined by the Treasury in accordance with provision made by or in accordance with the regulations.

(5) Regulations may make provision for the fiscal consequences of the exercise of a stabilisation power in respect of things done—

(a) during the period of three months before the date on which the stabilisation power is exercised, or

(b) on or after that date.

(6) In relation to the exercise of a supplemental, onward, bridge or subsequent instrument under paragraph 49, 50, 52, 66, 67, 69, 71, 73 or 82, in sub-paragraph (5)(a) above “the stabilisation power” is a reference to the first stabilisation power in connection with which the supplemental, onward, bridge or subsequent instrument is made.

(7) The Treasury may by regulations amend sub-paragraph (2) so as to—

(a) add an entry, or

(b) remove an entry.

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

Stay or sist of legal proceedings

106

(1) This paragraph applies where—

(a) the Bank has exercised a stabilisation power in relation to a CCP or a CCP group company, and

(b) the CCP or CCP group company is a party to legal proceedings before a court in the United Kingdom.

(2) The Bank may apply to that court for a stay or sist of proceedings where the Bank reasonably considers that a stay or sist of those proceedings is necessary for an effective application of the stabilisation options or the stabilisation powers.

Insolvency proceedings

107

(1) This paragraph applies to a CCP if—

(a) a stabilisation power has been exercised in respect of the CCP, or

(b) the conditions in paragraph 17 are met in relation to the CCP.

(2) Insolvency proceedings may not be commenced in relation to the CCP except by, or with the consent of, the Bank.

(3) For the purposes of sub-paragraph (2), the commencement of insolvency proceedings means—

(a) making an application for an administration order,

(b) presenting a petition for winding up,

(d) appointing an administrator.

Recognition of transferee company

108

(1) The Bank may provide for a company to which the business of a CCP is transferred in accordance with paragraph 29(3) to be treated as a CCP for the purposes of FSMA 2000—

(a) for a specified period, or

(b) until a specified event occurs.

(2) The provision may have effect—

(a) for a period specified in the instrument, or

(b) until the occurrence of an event specified or described in the instrument.

(3) The power under this paragraph—

(a) may be exercised only with the consent of the Treasury, and

(b) must be exercised by way of provision in a property transfer instrument.

International obligation notice: general

109

(1) The Bank may not exercise a stabilisation power in respect of a CCP if the Treasury notify the Bank that the exercise would be likely to contravene an international obligation of the United Kingdom.

(2) A notice under sub-paragraph (1)—

(a) must be in writing, and

(b) may be withdrawn (generally, partially or conditionally).

(3) If the Treasury give a notice under sub-paragraph (1) the Bank must consider other exercises of the stabilisation powers with a view to—

(a) pursuing the special resolution objectives, and

(b) avoiding the objections on which the Treasury’s notice was based.

(4) The Treasury may by notice to the Bank disapply sub-paragraph (3) in respect of a CCP and a notice may be revoked by further notice.

International obligation notice: bridge central counterparty

110

(1) This paragraph applies where the Bank has transferred all or part of a CCP’s business to a bridge central counterparty.

(2) The Bank must comply with any notice of the Treasury requiring the Bank, for the purpose of ensuring compliance by the United Kingdom with its international obligations—

(a) to take specified action under this Schedule in respect of the bridge central counterparty, or

(b) not to take specified action under this Schedule in respect of the bridge central counterparty.

(3) A notice under sub-paragraph (2)—

(a) must be in writing, and

(b) may be withdrawn (generally, partially or conditionally).

(4) A notice may include requirements about timing.

Public funds: general

111

(1) The Bank may not exercise a stabilisation power in respect of a CCP without the Treasury’s consent if the exercise of that power would be likely to have implications for public funds.

(2) In sub-paragraph (1)—

(a) “public funds” means the Consolidated Fund and any other account or source of money which cannot be drawn or spent other than by, or with the authority of, the Treasury, and

(b) action has implications for public funds if it would or might involve or lead to a need for the application of public funds.

(3) The Treasury may by regulations specify considerations which are to be, or not to be, taken into account in determining whether action has implications for public funds for the purpose of sub-paragraph (1).

(4) If the Treasury refuse consent under sub-paragraph (1), the Bank must consider other exercises of the stabilisation powers with a view to—

(a) pursuing the special resolution objectives, and

(b) avoiding the objections on which the Treasury’s refusal was based.

(5) The Treasury may by notice to the Bank disapply sub-paragraph (4) in respect of a CCP; and a notice may be revoked by further notice.

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

Public funds: bridge central counterparty

112

(1) This paragraph applies where the Bank has transferred all or part of a CCP’s business to a bridge central counterparty.

(2) The Bank may not take action in respect of the bridge central counterparty without the Treasury’s consent if the action would be likely to have implications for public funds.

(3) Paragraph 111 (2) and (3) have effect for the purposes of this paragraph.

Private sector purchaser: report

113

(1) This paragraph applies where the Bank sells all or part of a CCP’s business to a commercial purchaser.

(2) The Bank must report to the Chancellor of the Exchequer about the exercise of the power to make share transfer instruments and property transfer instruments under paragraph 27(2).

(3) The report must comply with any requirements as to content specified by the Treasury.

(4) The report must be made as soon as is reasonably practicable after the end of one year beginning with the date of the first transfer instrument made under paragraph 27(2).

Bridge central counterparty: report

114

(1) Where the Bank transfers all or part of a CCP’s business to a bridge central counterparty, the Bank must report to the Chancellor of the Exchequer about the activities of the bridge central counterparty.

(2) The first report must be made as soon as is reasonably practicable after the end of one year beginning with the date of the first transfer to the bridge central counterparty.

(3) A report must be made as soon as is reasonably practicable after the end of each subsequent year.

(4) The Chancellor of the Exchequer must lay a copy of each report under sub-paragraph (2) or (3) before Parliament.

(5) The Bank must comply with any request of the Treasury for a report dealing with specified matters in relation to a bridge central counterparty.

(6) A request under sub-paragraph (5) may include provision about—

(a) the content of the report;

(b) timing.

Resolution instruments: report

115

(1) This paragraph applies where the Bank makes one or more resolution instruments in respect of a CCP.

(2) The Bank must, on request by the Treasury, report to the Chancellor of the Exchequer about—

(a) the exercise of the power to make the resolution instrument, and

(b) any other matters in relation to the CCP that the Treasury may specify.

(3) In relation to the matter specified in sub-paragraph (2)(a), the report must comply with any requirements that the Treasury may specify.

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

Transfer of ownership: report

116

(1) This paragraph applies where the Bank makes one or more share transfer instruments in respect of a CCP under paragraph 30(2).

(2) The Bank must report to the Chancellor of the Exchequer about the exercise of the power to make share transfer instruments under that paragraph.

(3) The report must comply with any requirements as to content specified by the Treasury.

(4) The report must be made as soon as is reasonably practicable after the end of one year beginning with the date of the first transfer instrument made under paragraph 30(2).

Sale to commercial purchaser, transfer to bridge central counterparty and transfer of ownership: conditions for group companies

117

(1) The Bank may exercise a stabilisation power in respect of a CCP group company in accordance with paragraph 27(2), 29(3) or 30(2) if each of the following conditions is met.

(2) Condition 1 is that the Bank is satisfied that the general conditions for the exercise of a stabilisation power set out in paragraph 17 are met in respect of a CCP in the same group.

(3) Condition 2 (which does not apply in a financial assistance case) is that the Bank is satisfied that the exercise of the power in respect of the CCP group company is necessary, having regard to the public interest in—

(a) the stability of the UK financial system, and

(b) the maintenance of public confidence in the stability of that system.

(4) Condition 3 (which applies only in a financial assistance case) is that—

(a) the Treasury have recommended the Bank to exercise a stabilisation power on the grounds that it is necessary to protect the public interest, and

(b) in the Bank’s opinion, exercise of the power in respect of the CCP group company is an appropriate way to provide that protection.

(5) Condition 4 is that the CCP group company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom.

(6) Before determining whether Condition 2 or 3 (as appropriate) is met, the Bank must consult—

(a) the Treasury,

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

(7) In exercising a stabilisation power in reliance on this paragraph the Bank must have regard to the need to minimise the effect of the exercise of the power on other undertakings in the same group.

(8) In this paragraph “financial assistance case” means a case in which the Treasury notify the Bank that they have provided financial assistance in respect of a CCP in the same group for the purpose of resolving or reducing a serious threat to the stability of the UK financial system.

Paragraph 117: supplemental

118

(1) In paragraph 117 references to CCPs includes references to CCP group companies.

(2) Where the Bank exercises a stabilisation power in respect of a CCP group company in reliance on paragraph 117, the provisions relating to the stabilisation powers contained in this Schedule (except paragraphs 17 and 19) and any other enactment apply (with any necessary modifications) as if the CCP group company were a CCP.

PART 6 — Information, investigation and enforcement

Information

119

(1) This paragraph applies only to information and documents reasonably required in connection with the exercise by the Bank of functions conferred by or under this Schedule.

(2) The Bank may, by notice in writing given to a CCP or CCP group company, require the CCP or CCP group company—

(a) to provide specified information or information of a specified description, or

(b) to produce specified documents or documents of a specified description.

(3) The information or documents must be provided or produced—

(a) before the end of such reasonable period as may be specified, and

(b) at such place as may be specified.

(4) An officer who has written authorisation from the Bank to do so may require a CCP or CCP group company without delay—

(a) to provide the officer with specified information or information of a specified description, or

(b) to produce to the officer specified documents or documents of a specified description.

(5) The Bank may require any information provided under this paragraph to be provided in such form as it may reasonably require.

(6) The Bank may require—

(a) any information provided, whether in a document or otherwise, to be verified in such manner, or

(b) any document produced to be authenticated in such manner,

as it may reasonably require.

(7) The powers conferred by sub-paragraphs (2) and (4) may also be exercised by the Bank to impose requirements on a person who is connected with a CCP.

(8) “Officer” means an officer of the Bank, and includes a member of the Bank’s staff or an agent of the Bank.

(9) “Specified” means—

(a) in sub-paragraphs (2) and (3), specified in the notice, and

(b) in sub-paragraph (4), specified in the authorisation.

(10) For the purposes of this paragraph, a person is connected with a CCP if that person is or has at any relevant time been—

(a) a member of that CCP’s group,

(b) a controller of that CCP (within the meaning of section 422 of FSMA 2000), or

(c) in relation to that CCP, a person mentioned in Part 1 of Schedule 15 to FSMA 2000 (reading references in that Part to the authorised person as references to the CCP).

Reports by skilled persons

120

(1) This paragraph applies where the Bank has required or could require a person to whom sub-paragraph (2) applies (“the person concerned”) to provide information or produce documents with respect to any matter (“the matter concerned”) under paragraph 119.

(2) This sub-paragraph applies to—

(a) a CCP,

(b) a member of a CCP’s group, or

who is, or was at the relevant time, carrying on a business.

(3) The Bank may either—

(a) by notice in writing given to the person concerned, require that person to provide the Bank with a report on the matter concerned, or

(b) itself appoint a person to provide the Bank with a report on the matter concerned.

(4) When acting under sub-paragraph (3)(a), the Bank may require the report to be in such form as may be specified in the notice.

(5) The Bank must give notice of an appointment under sub-paragraph (3)(b) to the person concerned.

(6) The person appointed to make a report—

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.

This text is published under legislation.gov.uk's own terms of reuse, not a Legalize or public-domain licence. legislation.gov.uk
Open Government Licence v3.0 (attribution required)
© Crown and database right. Derived from content available under the Open Government Licence v3.0 from legislation.gov.uk.