The Financial Markets and Insolvency (Money Market) Regulations 1995

Explanatory Note

(This note is not part of the Regulations)

The regulations apply the provisions of Part VII of the Companies Act 1989 (“the 1989 Act”), with modifications, to certain aspects of the settlement arrangements in relation to the money markets provided by persons admitted to a list maintained by the Bank of England under section 171 of the 1989 Act. Part VII of the 1989 Act is concerned with the relationship between insolvency law and the default proceedings of certain financial markets. The regulations also make provision to facilitate the supervision by the Bank of England of persons it has admitted to the list.

Regulations 4 and 5 of the regulations apply to certain contracts, with modifications, those provisions of Part VII of the 1989 Act that concern contracts connected with a body which is a recognised investment exchange or a recognised clearing house under the Financial Services Act 1986 to certain contracts entered into by a person on the list maintained by the Bank of England.

Regulations 6 to 18 apply, with modifications, certain provisions of the Financial Services Act 1986 in relation to a person on the list. The provisions in question enable the Bank of England to apply to the court for an order requiring a person on the list to comply with the requirements mentioned in the regulation 7, to exercise certain powers of intervention and to petition for the winding up or administration of a person on the list. They also enable the Bank of England to conduct an investigation into the affairs of a person on the list so far as relevant to the settlement arrangements which that person provides.

Regulation 19 requires a person on the list to give the Bank of England notice of any proposal to amend his default rules, to make a report to it on completion of default proceedings and confers power on the Bank to direct a person on the list to take, or refrain from taking, action under his default rules. Regulation 19 also enables an insolvency office-holder to ascertain whether a person on the list proposes to take action under his default rules and confers a limited indemnity from actions in damages on a person on the list.

Regulations 20 to 24 make provision as to enforcement of certain charges granted in favour of a person on the list in connection with the provision of settlement arrangements, and regulation 25 makes provision as to the rights of third parties in relation to certain property provided to a person on the list for the purposes of or in connection with the provision of settlement arrangements.

Regulation 26 deals with the application of Part VII where a person enters, in more than one capacity, into contracts in relation to which a person on the list provides settlement arrangements. It provides that, in such a case, the provisions of the Part apply as if contracts entered into in each capacity were entered into by different persons.

Regulation 27 requires the Bank of England not to admit a person to the list unless it is satisfied that the requirements of the Schedule to the regulations are met and the person in question is able and willing to cooperate with certain other regualtory authorities. It also requires the Bank of England to have arrangements for the removal of a person from the list if it is satisfied that the person does not meet the requirements of the Schedule.

Regulation 28 makes provision for the continued application of Part VII of the 1989 Act, as modified by the regulations, after a person is removed from the list and regulation 29 confers a limited exemption from liability in damages on the Bank of England. Regulation 30 limits to Great Britain the territorial scope of the regulations and the provisions of Part VII of the 1989 Act applied by the regulations in modified form.