Finance Act 2018

4 (1) Paragraph 25 (UK allocated equity and liabilities: netting) is amended as follows. U.K.

(2) In sub-paragraph (1), in the words before paragraph (a), after “applies” insert “ for the purposes of Steps 1 and 2 in paragraph 24(1) ”.

(3) In sub-paragraph (1)(c), for the words from “makes provision” to “occurs” substitute “ makes net settlement provision ”.

(4) After sub-paragraph (1) insert—

“(1A) In sub-paragraph (1)(c), “net settlement provision” means provision for there to be a single net settlement—

(a) if a netting event occurs, or

(b) at the option of the bank or N, if a netting event occurs.

(1B) The reference in sub-paragraph (1A) to a “single net settlement” is a reference to a single net settlement of—

(a) all the bank's liabilities (so far as covered by the provision mentioned in sub-paragraph (1)(c)), and

(b) all N's liabilities (so far as covered by that provision).

(1C) But a provision for there to be single net settlement—

(a) at the option of the bank, but not at the option of N, if a netting event occurs, or

(b) at the option of N, but not at the option of the bank, if a netting event occurs,

is not to be treated as a net settlement provision for the purposes of sub-paragraph (1)(c).”

(5) For sub-paragraph (2) substitute—

“(2) If the UK allocated equity and liabilities of the bank are being determined for the purposes of paragraph 15(2)(b), this paragraph does not apply if N is—

(a) a UK resident entity which is a member of a UK sub-group,

(b) a chargeable UK resident entity (see paragraph 15C), or

(c) another relevant foreign bank which is a member of the relevant group.”

(6) In sub-paragraph (3)(d), for “ “the netting event occurs”” substitute “ “a netting event occurs” ”.

(7) Omit sub-paragraph (8).

(8) Omit sub-paragraph (13).