C1C2 Part VII Financial Markets and Insolvency
Pt. VII: power to apply conferred (1.12.2001) by 2000 c. 8, s. 301(1)(a); S.I. 2001/3538, art. 2(1)
Recognised investment exchanges and clearing houses
I1C3166 Powers F19... to give directions.
1
The powers conferred by this section are exercisable in relation to a recognised UK investment exchange or F17recognised clearing house.
2
Where in any case an exchange or clearing house has not taken action under its default rules—
a
3
Before giving such a direction the F10appropriate regulator shall consult the exchange or clearing house in question; and F2it shall not give a direction unless F2it is satisfied, in the light of that consultation—
a
in the case of a direction to take action, that failure to take action would involve undue risk to investors or other participants in the market, F11...
b
in the case of a direction not to take action, that the taking of action would be premature or otherwise undesirable in the interests of investors or other participants in the market,
F12c
in either case, that the direction is necessary having regard to the public interest in the stability of the financial system of the United Kingdom, or
d
in either case, that the direction is necessary—
i
to facilitate a proposed or possible use of a power under Part 1 of the Banking Act 2009 (special resolution regime), or
ii
in connection with a particular exercise of a power under that Part.
F33A
The appropriate regulator may give a direction to a relevant office-holder appointed in respect of a defaulting clearing member to take any action, or refrain from taking any action, if the direction is given for the purposes of facilitating—
a
the transfer of a clearing member client contract, a client trade or a qualifying collateral arrangement, or
b
a qualifying property transfer.
3B
The relevant office-holder to whom a direction is given under subsection (3A)—
a
must comply with the direction notwithstanding any duty on the relevant office-holder under any enactment relating to insolvency, but
b
is not required to comply with the direction given if the value of the clearing member’s estate is unlikely to be sufficient to meet the office-holder’s reasonable expenses of complying.
3C
The expenses of the relevant office-holder in complying with a direction of the regulator under subsection (3A) are recoverable as part of the expenses incurred in the discharge of the office-holder’s duties.
4
A direction shall specify the grounds on which it is given.
5
A direction not to take action may be expressed to have effect until the giving of a further direction (which may be a direction to take action or simply revoking the earlier direction).
6
No direction shall be given not to take action if, in relation to the person in question—
a
a bankruptcy order or an award of sequestration of his estate has been made, or an interim receiver or interim trustee has been appointed, or
b
a winding up order has been made, a resolution for voluntary winding up has been passed or an administrator, administrative receiver or provisional liquidator has been appointed;
and any previous direction not to take action shall cease to have effect on the making or passing of any such order, award or appointment.
7
Where an exchange or clearing house has taken or been directed to take action under its default rules, the F13appropriate regulator may direct it to do or not to do such things (being things which it has power to do under its default rules) as are specified in the direction.
F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F47A
Where the exchange or clearing house is acting in accordance with a direction under subsection (2)(a) that was given only by virtue of paragraph (a) of subsection (3), the appropriate regulator shall not give a direction under subsection (7) unless it is satisfied that the direction under that subsection will not impede or frustrate the proper and efficient conduct of the default proceedings.
7B
Where the exchange or clearing house has taken action under its default rules without being directed to do so, the appropriate regulator shall not give a direction under subsection (7) unless—
a
it is satisfied that the direction under that subsection will not impede or frustrate the proper and efficient conduct of the default proceedings, or
b
it is satisfied that the direction is necessary—
i
having regard to the public interest in the stability of the financial system of the United Kingdom,
ii
to facilitate a proposed or possible use of a power under Part 1 of the Banking Act 2009 (special resolution regime), or
iii
in connection with a particular exercise of a power under that Part.
8
A direction under this section is enforceable, on the application of the F16regulator which gave the direction, by injunction or, in Scotland, by an order under section 45 of the M1Court of Session Act 1988; and where an exchangeF15, a clearing house or a relevant office-holder has not complied with a direction, the court may make such order as it thinks fit for restoring the position to what it would have been if the direction had been complied with.
F59
“The appropriate regulator”—
a
in relation to a recognised UK investment exchange, means the FCA, and
b
in relation to a F18recognised clearing house, means the Bank of England.
Pt. VII (ss. 154-191): functions of the Secretary of State transferred (7.6.1992) to the Treasury by S.I. 1992/1315, art. 2(1)(c) (with art. 6)
Pt. VII (ss. 154-191) applied (E.W.S.) (15.8.1995) by S.I. 1995/2049, reg.3; and applied (with modifications) (E.W.S.) (15.8.1995) by S.I. 1995/2049, regs.3,4,5,19, 26; and applied (with modifications) (15.7.1996) by S.I. 1996/1469, regs.3, 4, 5