11.—(1) This paragraph applies as regards contracts falling within section 155(2)(a) of the Companies Act.U.K.
(2) The rules mentioned in paragraph 10 must provide—
(a)for all rights and liabilities between those party as principal to unsettled market contracts to which the defaulter is party as principal to be discharged and for there to be paid by one party to the other such sum of money (if any) as may be determined in accordance with the rules;
(b)for the sums so payable in respect of different contracts between the same parties to be aggregated or set off so as to produce a net sum; and
(c)for the certification by or on behalf of the exchange of the net sum payable or, as the case may be, of the fact that no sum is payable.
(3) The reference in sub-paragraph (2) to rights and liabilities between those party as principal to unsettled market contracts does not include rights and liabilities—
(a)in respect of margin; or
(b)arising out of a failure to perform a market contract.
(4) The rules may make the same or similar provision, in relation to non-members designated in accordance with the procedures mentioned in sub-paragraph (5), as in relation to members of the exchange.
(5) If such provision is made as is mentioned in sub-paragraph (4), the exchange must have adequate procedures—
(a)for designating the persons, or descriptions of person, in respect of whom action may be taken;
(b)for keeping under review the question which persons or descriptions of person should be or remain so designated; and
(c)for withdrawing such designation.
(6) The procedures must be designed to secure that—
(a)a person is not, or does not remain, designated if failure by him to meet his obligations in respect of one or more market contracts would be unlikely adversely to affect the operation of the market; and
(b)a description of persons is not, or does not remain, designated if failure by a person of that description to meet his obligations in respect of one or more market contracts would be unlikely adversely to affect the operation of the market.
(7) The exchange must have adequate arrangements—
(a)for bringing a designation or withdrawal of designation to the attention of the person or description of persons concerned; and
(b)where a description of persons is designated, or the designation of a description of persons is withdrawn, for ascertaining which persons fall within that description.
Commencement Information
I1Sch. para. 11 in force at 1.12.2001, see reg. 2