The Investment Bank Special Administration Regulations 2011

Interpretation U.K.

2.—(1) In these Regulations, except where the context otherwise requires—

“the Act” means the Banking Act 2009;

“administrator” has the meaning set out in regulation 4;

“Authorities” means the Bank of England, the Treasury [F1 , the FCA and the PRA];

“business day” has the meaning set out in section 251 of the Insolvency Act;

“client” means a person for whom the investment bank has undertaken to receive or hold client assets (whether or not on trust and whether or not that undertaking has been complied with);

[F2 “client money account” means an account which the investment bank maintains in accordance with client money rules, including an account with any person which the investment bank maintains for the purpose of—

(a)

any transaction with or by that person for a client’s benefit; or

(b)

meeting a client’s obligation to provide collateral for a transaction;]

[F2 “client money” means client assets which are money received or held by an investment bank for, or on behalf of, clients;]

[F2 “client money pool” means the pool of client money which is held on trust by the investment bank in accordance with client money rules and has been pooled in accordance with those rules for the purpose of distribution;]

[F2 “client money rules” means rules made under Part 9A of FSMA (rules and guidance) which make provision relating to the handling and distribution of money held by a person who is authorised for the purposes of FSMA;]

“contributory” has the meaning set out in section 79 of the Insolvency Act M1 ;

“court” means—

(a)

in England and Wales, the High Court,

(b)

in Scotland, the Court of Session, and

(c)

in Northern Ireland, the High Court;

“deposit-taking bank” means an investment bank to which the definition set out either in section 2 or in section 91 of the Act applies;

“the Disqualification Act” means the Company Directors Disqualification Act 1986 M2 ;

[F3 “EEA central counterparty” has the meaning set out in section 285 of FSMA;]

“enactment” includes—

(a)

an enactment comprised in or in an instrument made under an Act of the Scottish Parliament;

(b)

Acts and Measures of the National Assembly for Wales and instruments made such an Act or Measure;

(c)

Northern Ireland legislation;

and any EU Instrument (as defined in Part 2 of Schedule 1 of the European Communities Act 1972 M3 );

“fair” is to be construed in accordance with section 93(8) of the Act;

[F4 “FCA” means the Financial Conduct Authority;]

[F5 “foreign property” has the meaning given by section 39(2) of the Act;]

[F5 “FSCS” means the scheme manager of the Financial Services Compensation Scheme (established under Part 15 of FSMA);

“FSMA” means the Financial Services and Markets Act 2000 M4 ;

“the Insolvency Act” means the Insolvency Act 1986 M5 ;

“insolvency rules” means rules made under section 411 of the Insolvency Act as applied and modified by regulation 15;

“market charge” means a charge to which Part 7 of the Companies Act 1989 M6 applies as a result of the operation of section 173 of that Act M7 ;

“market contract” means a contract to which Part 7 of the Companies Act 1989 applies as a result of the operation of section 155 of that Act M8 ;

“market infrastructure body” means a recognised clearing house, recognised investment exchange [F6 , EEA central counterparty, third country central counterparty], recognised overseas clearing house or recognised overseas investment exchange in relation to which the investment bank is a counterparty in a market contract or to a market charge or is a member or participant;

“Objective 1”, “Objective 2” and “Objective 3” have the meanings set out in regulation 10;

[F7 “PRA” means the Prudential Regulation Authority;]

[F7 “PRA-authorised person” has the meaning given by FSMA;]

“prescribed” means prescribed by insolvency rules;

“recognised clearing house” has the meaning set out in section 285 of FSMA;

“recognised investment exchange” has the meaning set out in section 285 of FSMA;

“recognised overseas clearing house” means an overseas person in respect of whom [F8 a recognition order has been made] under section 292 of FSMA M9 declaring them to be a recognised clearing house;

“recognised overseas investment exchange” means an overseas person in respect of whom [F9 a recognition order has been made] under section 292 of FSMA declaring them to be a recognised investment exchange;

[F10 “the regulators” means the FCA and the PRA, and references to a regulator are to be read accordingly;]

“Schedule B1” means Schedule B1 to the Insolvency Act M10 ;

“Schedule B1 administration” means the administration procedure set out in Schedule B1;

“securities” means financial instruments as defined in regulation 3 of the Financial Collateral Arrangements (No.2) Regulations 2003 M11 ;

“security interest” means any legal or equitable interest or any other right in security (other than a title transfer financial collateral arrangement) created or otherwise arising by way of security including—

(a)

a pledge,

(b)

a mortgage,

(c)

a fixed charge,

(d)

a charge created as a floating charge, or

(e)

a lien;

“special administration” has the meaning set out in regulation 3;

“special administration (bank insolvency)” has the meaning set out in paragraph 1 of Schedule 1;

“special administration (bank administration)” has the meaning set out in paragraph 1 of Schedule 2;

“special administration objectives” has the meaning set out in regulation 10;

“special administration order” has the meaning set out in regulation 4;

“statement of proposals” means the statement of proposals drawn up by the administrator in accordance with—

(a)

paragraph 49 of Schedule B1 (as applied by regulation 15);

(b)

where the [F11 FCA or, where relevant, the PRA] has given a direction, regulation 17; or

(c)

in relation to Schedule 2, paragraph 7 of that schedule; and

[F3 “third country central counterparty” has the meaning set out in section 285 of FSMA;]

“title transfer financial collateral arrangement” has the meaning set out in regulation 3 of the Financial Collateral Arrangements (No.2) Regulations 2003.

(2) In the definition of “security interest”, in sub-paragraph (c), in its application to Scotland, “fixed charge” means a fixed security within the meaning given by section 47(1) of the Bankruptcy and Diligence etc. (Scotland) Act 2007 M12 .

[F12 (2A) In these Regulations a reference to the investment bank’s own bank accounts includes a reference to any account, other than a client money account, opened by the administrator for the purposes of the special administration.]

(3) References in these Regulations to a regulated activity must be read with—

(a) section 22 of FSMA (classes of regulated activity and categories of investment);

(b) any relevant order under that section; and

(c) Schedule 2 to that Act (regulated activities).

(4) For the purposes of a reference in these Regulations to inability to pay debts—

(a) an investment bank that is in default on an obligation to pay a sum due and payable under an agreement is to be treated as unable to pay its debts; and

(b) section 123 of the Insolvency Act (inability to pay debts) also applies,

and for the purposes of sub-paragraph (a), “agreement” means an agreement the making or performance of which constitutes or is part of a regulated activity carried on by the investment bank.

(5) Expressions used in these Regulations and in the Insolvency Act have the same meaning as in that Act, and the provision made by paragraphs 100 and 101 of Schedule B1 (as applied by regulation 15) in respect of the effect of the references in that Schedule also apply in respect of the same references where used in these Regulations.

(6) Expressions used in these Regulations and in the Companies Act 2006 M13 have the same meaning as in that Act.

(7) Regulation 26 applies with respect to the application of these Regulations to Northern Ireland.]

Textual Amendments

F1 Words in reg. 2(1) substituted (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), art. 1(1), Sch. 2 para. 198(a)(i) (with Sch. 2 para. 199)

F2 Words in reg. 2(1) inserted (6.4.2017) by The Investment Bank (Amendment of Definition) and Special Administration (Amendment) Regulations 2017 (S.I. 2017/443), regs. 1, 5(a)(i) (with reg. 17)

F3 Words in reg. 2(1) inserted (1.4.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (S.I. 2013/504), regs. 1(2), 41(2)(b) (with regs. 52-58)

F4 Words in reg. 2(1) substituted (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), art. 1(1), Sch. 2 para. 198(a)(ii) (with Sch. 2 para. 200)

F5 Words in reg. 2(1) inserted (6.4.2017) by The Investment Bank (Amendment of Definition) and Special Administration (Amendment) Regulations 2017 (S.I. 2017/443), regs. 1, 5(a)(ii) (with reg. 17)

F6 Words in reg. 2(1) inserted (1.4.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (S.I. 2013/504), regs. 1(2), 41(2)(a) (with regs. 52-58)

F7 Words in reg. 2(1) inserted (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), art. 1(1), Sch. 2 para. 198(a)(iii) (with Sch. 2 para. 201)

F8 Words in reg. 2(1) substituted (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), art. 1(1), Sch. 2 para. 198(a)(iv) (with Sch. 2 para. 202)

F9 Words in reg. 2(1) substituted (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), art. 1(1), Sch. 2 para. 198(a)(v) (with Sch. 2 para. 203)

F10 Words in reg. 2(1) inserted (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), art. 1(1), Sch. 2 para. 198(a)(vi) (with Sch. 2 para. 204)

F11 Words in reg. 2(1) substituted (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), art. 1(1), Sch. 2 para. 198(a)(vii) (with Sch. 2 para. 205)

F12 Reg. 2(2A) inserted (6.4.2017) by The Investment Bank (Amendment of Definition) and Special Administration (Amendment) Regulations 2017 (S.I. 2017/443), regs. 1, 5(b) (with reg. 17)

Marginal Citations

M1 Section 79 was amended by S.I. 2009/1941.

M2 1986 c. 46.

M3 1972 c. 68; Schedule 1 was amended by the European Union (Amendment) Act 2008 (c.7), section 3(3), Schedule, Part 1.

M4 2000 c. 8.

M5 1986 c. 45.

M6 1989 c. 40.

M7 Section 173 was amended by S.I. 1991/880 and by S.I. 1992/1315.

M8 Section 155 was amended by S.I. 1991/880, S.I. 1998/1748 and by S.I. 2009/853.

M9 Section 292 was amended by S.I. 2006/2975.

M10 Relevant amendments to Schedule B1 were made by S.I. 2003/2096, S.I. 2005/879, S.I. 2007/2974, S.I. 2008/948, S.I. 2008/1897, S.I. 2009/1941 and S.I. 2010/18.

M11 S.I. 2003/3226.

M12 2007 asp 3.

M13 2006 c.46.