Financial Services Act 2012

Financial Services Act 2012

2012 CHAPTER 21

Commentary

Part 9 – Miscellaneous

Settlement systems

Section 112: Evidencing and transfer of title to securities without written instrument

630. Chapter 2 of Part 21 of the Companies Act 2006 (evidencing and transfer of title to securities without written instrument) confers on the Treasury and the Secretary of State the power to make (either on a joint or concurrent basis) regulations concerning: (a) the procedures for recording and transferring title to “securities” (defined in section 783); and (b) the regulation of those procedures and the persons responsible for, or involved in the operation of relevant systems (section 785(2)). The Uncertificated Securities Regulations 2001, S.I. 2001/3755 (the “Regulations”) were made under this power.

631. The Regulations enable title to securities to be transferred without a written instrument (that is, in “dematerialised” or “uncertificated” form). In addition, the Regulations set out the regulatory framework for the operators of settlement systems which provide for the electronic transfer of title (see Part 2 (the operator) and Schedule 1 to the Regulations (requirements for approval of a person as an operator)).

632. Currently, certain functions (for example, concerning the approval of a person as an operator) are conferred on the Treasury under the Regulations. However, the Treasury has exercised its power under regulation 11 (delegation of Treasury functions) to delegate to the Authority (defined as the FSA) all of the functions conferred by Part 2 of the regulations (for example, responsibility for approving systems as “relevant systems”) save for those specified in regulation 12 (international obligations).

633. As part of the regulatory reforms, it is intended that the Bank is to assume the FSA’s functions under the Regulations. This is to be achieved by making new regulations conferring the relevant functions directly on the Bank. In order to facilitate this, minor amendments to the enabling power in section 785 are needed. Section 93 inserts a new subsection (7) into section 785 of the Companies Act 2006 in order to enable provision to be made in the regulations for the purposes of conferring functions directly on the Bank (or any other person), and ensuring that the Bank could be given the power to make guidance or issue codes of practice or rules in relation to any provision made by the regulations. In addition, a new subsection (8) is inserted which will enable provision to be made in the regulations which confers immunity from liability in damages in specified cases (for example, in cases in which action is taken in the interests of addressing a threat to financial stability).