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Financial Services and Markets Act 2023

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29U.K.After Article 6a insert—

Article 6bU.K.Risk reduction services

1.The Bank of England may by rules provide for the clearing obligation referred to in Article 4(1) in respect of a class or classes of OTC derivatives not to apply—

(a)in relation to activities or transactions of a specified description carried out as part of a risk reduction service, or

(b)to persons of a specified description in the provision of such services.

2.The power to make rules under paragraph 1 is exercisable only if the Bank of England considers that the rules are necessary or expedient for the purpose of advancing the financial stability objective under section 2A of the Bank of England Act 1998.

3.The risk reduction services to which the rules relate may only be post-trade services that do not give rise to any transactions that contribute to the price discovery process.

4.The rules—

(a)may describe the risk reduction services to which they relate in whatever way the Bank of England considers appropriate (subject to paragraph 3);

(b)may provide for whatever conditions or exceptions the Bank of England considers appropriate.

5.In this Article—

  • risk reduction service” means a service provided to two or more counterparties to derivatives transactions for the purpose of reducing non-market risks in derivatives portfolios (including, for example, portfolio compression);

  • specified” means specified in the rules.

Commencement Information

I1Sch. 2 para. 29 not in force at Royal Assent, see s. 86(3)

I2Sch. 2 para. 29 in force at 29.8.2023 by S.I. 2023/779, reg. 4(zz)(ii)

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