Financial Services and Markets Act 2023

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—

• (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,

• (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 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

• (c) the Treasury.

• (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;

• (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” 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,

• (c) a right accrues to terminate, modify or replace the agreement,

• (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,

• (c) has effect only for so long as a specified event does not occur,

• (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;

• (c) provision specifying the maximum time period for which a suspension under the regulations may take effect;

• (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,

• (c) provision conferring functions on independent valuers (including conferring a discretion),

• (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,

• (c) “group undertaking” has the meaning given by section 1161(5) of the Companies Act 2006,

• (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

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

• (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),

• (c) the CCP (where the original transfer was a share 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.

General continuity obligation: share transfers

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),

• (c) “group undertaking” has the meaning given by section 1161(5) of the Companies Act 2006.

• (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.

Special continuity obligations: share transfers

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

• (c) must be exercised by way of provision in a share transfer instrument.

• (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.

Continuity obligations: onward share transfers

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.