Financial Services and Markets Act 2023

Termination rights etc U.K.

84 (1) In this paragraph—

• “resolution measure” means—

  (a)

  the making by the Bank of a stabilisation instrument in relation to a CCP,

  (b)

  where an instrument of control under paragraph 38 is in place in relation to a CCP, the exercise by the Bank of any relevant rules of the CCP,

  (c)

  a measure taken by a CCP as a result of directions given under paragraph 2,

  (d)

  the removal by a CCP of a director or senior manager as a result of a requirement imposed under paragraph 5,

  (e)

  the appointment of a temporary manager in relation to a CCP under paragraph 6,

  (f)

  a restriction or prohibition on payments under paragraph 13 or 102,

  (g)

  the recognition by the Bank of third-country resolution action (or part of such action) in accordance with Part 7 of this Schedule, or

  (h)

  the exercise by the Bank of a stabilisation power by virtue of paragraph 146(3);

• “default event provision” means a Type 1 or Type 2 default event provision (see sub-paragraphs (2) and (3));

• “relevant rules”, in relation to a CCP, mean rules ensuring that the requirements under paragraph 29A or 36 of the Schedule to the Financial Services and Markets Act 2000 (Recognition Requirements for Investment Exchanges, Clearing Houses and Central Securities Depositories) Regulations 2001 (S.I. 2001/995) are met;

• “stabilisation instrument” means—

  (a)

  a share transfer instrument,

  (b)

  a property transfer instrument, or

  (c)

  a resolution instrument.

(2) A Type 1 default event provision is a provision of a contract or other agreement that has the effect that if a specified event occurs or situation arises—

(a) the agreement is terminated, modified or replaced,

(b) rights or duties under the agreement are terminated, modified or replaced,

(c) a right accrues to terminate, modify or replace the agreement,

(d) a right accrues to terminate, modify or replace rights or duties under the agreement,

(e) a sum becomes payable or ceases to be payable,

(f) delivery of anything becomes due or ceases to be due,

(g) a right to claim a payment or delivery accrues, changes or lapses,

(h) any other right accrues, changes or lapses,

(i) a right to accelerate, close out, set-off or net obligations accrues, changes or lapses, or

(j) an interest is created, changes or lapses.

(3) A Type 2 default event provision is a provision of a contract or other agreement that has the effect that a provision of the contract or agreement—

(a) takes effect only if a specified event occurs or does not occur,

(b) takes effect only if a specified situation arises or does not arise,

(c) has effect only for so long as a specified event does not occur,

(d) has effect only while a specified situation lasts,

(e) applies differently if a specified event occurs,

(f) applies differently if a specified situation arises, or

(g) applies differently while a specified situation lasts.

(4) For the purposes of sub-paragraphs (2) and (3) it is the effect of a provision that matters, not how it is described (nor, for example, whether it is presented in a positive or a negative form).

(5) Subject to sub-paragraph (7), sub-paragraph (6) applies where—

(a) a contract or agreement is entered into by a CCP, and

(b) the substantive obligations provided for in the contract or agreement (including payment and delivery obligations and provision of collateral) continue to be performed.

(6) The following are to be disregarded in determining whether a default event provision applies—

(a) a resolution measure, and

(b) the occurrence of any event directly linked to the application of such a measure.

(7) A stabilisation instrument may provide for sub-paragraph (6)—

(a) not to apply in relation to a contract or other agreement, or

(b) to apply in relation to a contract or other agreement only to the extent specified by the Bank in the instrument.

(8) Provision may be made under sub-paragraph (7) only if the Bank considers that such provision would advance one or more of the special resolution objectives.

(9) A stabilisation instrument may provide for sub-paragraph (10) or (11) to apply (but need not apply either) in circumstances where sub-paragraph (6) would not apply.

(10) If this sub-paragraph applies, the stabilisation instrument is to be disregarded in determining whether a default event provision applies.

(11) If this sub-paragraph applies, the stabilisation instrument is to be disregarded in determining whether a default event provision applies except so far as the instrument provides otherwise.

(12) In sub-paragraphs (9), (10) and (11) a reference to a stabilisation instrument is a reference to—

(a) the making of the instrument,

(b) anything that is done by the instrument or is to be, or may be, done under or by virtue of the instrument, and

(c) any action or decision taken or made under this or another enactment in so far as it resulted in, or was connected to, the making of the instrument.

(13) Provision under sub-paragraph (9) may apply sub-paragraph (10) or (11)—

(a) generally or only for specified purposes, cases or circumstances, or

(b) differently for different purposes, cases or circumstances.

(14) A thing is not done by virtue of a stabilisation instrument for the purposes of sub-paragraph (12)(b) merely by virtue of being done under a contract or other agreement rights or obligations under which have been affected by the instrument.

Commencement Information

I1 Sch. 11 para. 84 not in force at Royal Assent, see s. 86(3)

I2 Sch. 11 para. 84 in force at 31.12.2023 by S.I. 2023/1382, reg. 8(b)