Commission Delegated Regulation (EU) 2018/1229Show full title

Sub-section 2 U.K. Buy-in process for transactions cleared by a CCP

Article 26 U.K. Initial verification

1. On the business day following the expiry of the extension period, CCPs shall verify whether a buy-in is possible in accordance with Article 21(a) in relation to any of the transactions it has cleared.

2. Where a buy-in is not possible pursuant to Article 21(a), the CCP shall notify the failing clearing member of the cash compensation amount calculated in accordance with Article 32. The cash compensation shall be paid in accordance with Article 33(1).

3. Where a buy-in is possible, Article 27 shall apply.

Article 27 U.K. Buy-in procedure and notifications

1. Where a buy-in is possible, CCPs shall launch an auction or appoint a buy-in agent on the business day following the expiry of the extension period and notify the failing and receiving clearing members thereof.

2. Upon receipt of the notification referred to in paragraph 1, the failing clearing member shall ensure that any relevant settlement instruction relating to the settlement fail is put on hold.

3. Upon receipt of the notification referred to in paragraph 1, the failing clearing member may only deliver the financial instruments as follows:

(a) to the buy-in agent where the buy-in agent gives prior consent;

(b) to the CCP where the auction has been awarded to that failing clearing member.

Prior to receipt of the notification referred to in paragraph 1, the failing clearing member may still deliver the financial instruments directly to the CCP.

4. The CCP shall notify the results of the buy-in to the failing and receiving clearing members and to the relevant CSD at the latest on the last business day of the period determined in accordance with Article 37.

5. Where the buy-in is successful in part or in full, the notification referred to in paragraph 4 shall include the quantity and price of the bought-in financial instruments.

6. Where the buy-in fails in part or in full, the notification referred to in paragraph 4 shall include the cash compensation amount calculated in accordance with Article 32 unless that notification specifies that the execution of the buy-in is deferred.

7. Where the execution of the buy-in is deferred, the CCP shall notify the results of that deferred buy-in to the failing and receiving clearing members and to the relevant CSD at the latest on the last business day of the deferral period referred to in Article 38.

8. Where the buy-in referred to in paragraph 7 is successful in part or in full, the notification referred to in that paragraph shall include the quantity and price of the bought-in financial instruments.

9. Where the buy-in referred to in paragraph 7 fails in part or in full, the notification referred to in that paragraph shall include the cash compensation amount calculated in accordance with Article 32.

10. The CCP shall accept and pay for the bought-in financial instruments referred to in paragraphs 5 and 8 and ensure that the following is carried out at the end of each business day on which the CCP receives those financial instruments:

(a) the bought-in financial instruments are delivered to the receiving clearing members;

(b) the settlement instructions relating to the settlement fail are cancelled;

(c) new settlement instructions are entered into the securities settlement system for any non-delivered financial instruments and the CSD receives the information necessary to identify such new settlement instructions accordingly.

11. The CCP shall ensure that the settlement instructions relating to the settlement fail are cancelled upon payment of the cash compensation referred to in paragraphs 6 and 9 or, at the latest, on the second business day after the notification referred to therein.