Part VIIU.K. Financial Markets and Insolvency

Modifications etc. (not altering text)

C1Pt. 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

C2Pt. VII: power to apply conferred (1.12.2001) by 2000 c. 8, s. 301(1)(a); S.I. 2001/3538, art. 2(1)

[F1Recognised bodies]U.K.

Textual Amendments

166 Powers F2... to give directions.U.K.

(1)The powers conferred by this section are exercisable in relation to a recognised UK investment exchange or [F3recognised clearing house] [F4or recognised CSD].

(2)Where in any case [F5a recognised body] has not taken action under its default rules—

(a)if it appears to the [F6appropriate regulator] that it could take action, [F7the [F8regulator]] may direct it to do so, and

(b)if it appears to the [F9appropriate regulator] that it is proposing to take or may take action, [F7the [F10regulator]] may direct it not to do so.

(3)Before giving such a direction the [F11appropriate regulator] shall consult the [F12recognised body] in question; and [F13it] shall not give a direction unless [F13it] 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, F14...

(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,

[F15(c)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) [F16or Schedule 11 to the Financial Services and Markets Act 2023 (central counterparties)], or

(ii)in connection with a particular exercise of a power under that Part [F17or that Schedule].]

[F18(3A)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 [F19a recognised body] has taken or been directed to take action under its default rules, the [F20appropriate 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.

F21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F22(7A)Where the [F23recognised body] 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 [F24recognised body] 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) [F25or Schedule 11 to the Financial Services and Markets Act 2023 (central counterparties)], or

(iii)in connection with a particular exercise of a power under that Part [F26or that Schedule].]

(8)A direction under this section is enforceable, on the application of the [F27regulator which gave the direction], by injunction or, in Scotland, by an order under section 45 of the M1Court of Session Act 1988; and where [F28a recognised body] [F29or 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.

[F30(9)“The appropriate regulator”—

(a)in relation to a recognised UK investment exchange, means the FCA, and

(b)in relation to a [F31recognised CSD, a] [F32recognised clearing house] [F33or a defaulting clearing member], means the Bank of England.]

Textual Amendments

F2Words in s. 166 heading omitted (1.4.2013) by virtue of Financial Services Act 2012 (c. 21), ss. 111(9), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F6Words in s. 166(2)(a) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 111(2)(a), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F7Words in s. 166(2)(a)(b) substituted (1.12.2001) by S.I. 2001/3649, arts. 1, 81(2)(b)

F8Word in s. 166(2)(a) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 111(2)(b), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F9Words in s. 166(2)(b) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 111(3)(a), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F10Word in s. 166(2)(b) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 111(3)(b), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F11Words in s. 166(3) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 111(4)(a), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F13Words in s. 166(3) substituted (1.12.2001) by S.I. 2001/3649, arts. 1, 81(3)(b)

F14Word in s. 166(3) omitted (1.4.2013) by virtue of Financial Services Act 2012 (c. 21), ss. 111(4)(b), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F20Words in s. 166(7) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 111(5)(a), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F21Words in s. 166(7) omitted (1.4.2013) by virtue of Financial Services Act 2012 (c. 21), ss. 111(5)(b), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F22S. 166(7A)(7B) inserted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 111(6), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F27Words in s. 166(8) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 111(7), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Modifications etc. (not altering text)

Commencement Information

I1S. 166 wholly in force at 1.10.1991; s. 166 in force for certain purposes at 25.4.1991 see s. 215 and S.I. 1991/878, art. 2, Sch. (subject to savings in art. 3(2)) and wholly in force at 1.10.1991 see S.I. 1991/2173, art. 2.

Marginal Citations