The Stamp Duty and Stamp Duty Reserve Tax (Investment Exchanges and Clearing Houses) (Over the Counter) Regulations 2010

Prescribed circumstances for the purposes of sections 116 and 117

4.—(1) In the circumstances prescribed by paragraph (2) below, the charges to stamp duty and stamp duty reserve tax shall be treated as not arising.

(2) The circumstances prescribed are where, in connection with a transaction made over the counter, conditions A, B and C are met.

(3) Condition A is that traded securities are transferred, or agreed to be transferred, from—

(a) a clearing participant or its nominee to another clearing participant or its nominee;

(b) a non-clearing firm or its nominee or client to a clearing participant or its nominee;

(c) a clearing participant or its nominee to LCH.Clearnet Limited or its nominee;

(d) a person other than a clearing participant to LCH.Clearnet Limited or its nominee, as a result of a failure by a clearing participant to fulfil its obligations in respect of the transaction concerned to transfer traded securities to LCH.Clearnet Limited or its nominee; or

(e) LCH.Clearnet Limited or its nominee to a clearing participant or its nominee.

(4) Condition B is that the person to whom those securities are agreed to be transferred under any of the agreements specified in paragraph (3) above (“the relevant agreement”) is required on receipt of those securities to transfer traded securities under a matching agreement, to another person or, in the case of an agreement falling within paragraph 3(d), would have been so required if the failure referred to in that sub-paragraph had not occurred.

(5) Condition C is that traded securities which are the subject of a relevant agreement shall be dealt with by a clearing participant, who is a party to the relevant agreement, in a separate designated account.

(6) In this regulation—

(a) “designated account” means an account designated by LCH.Clearnet Limited for a clearing participant, in connection with the traded securities concerned;

(b) “matching agreement” means an agreement under which—

(i) the traded securities agreed to be transferred are of the same kind as the traded securities agreed to be transferred under the relevant agreement; and

(ii) the number and transfer price of the traded securities agreed to be transferred are in total identical to the number and transfer price of the traded securities agreed to be transferred under the relevant agreement.