Financial Services and Markets Act 2023

General continuity obligation: property transfers U.K.

89 (1) In this paragraph—

(a) “residual CCP” means a CCP all or part of whose business has been transferred under a property transfer instrument in accordance with paragraph 27(2), 29(3), 66(2) or 73(2),

(b) “group company” means anything which is, or was immediately before the transfer, a group undertaking in relation to a residual CCP,

(c) “group undertaking” has the meaning given by section 1161(5) of the Companies Act 2006,

(d) “the transferred business” means the part of the CCP’s business that has been transferred, and

(e) “transferee” means a commercial purchaser or bridge central counterparty to whom all or part of the transferred business has been transferred.

(2) In this paragraph a reference to insolvency includes a reference to liquidation, administration, receivership, composition with creditors and a scheme of arrangement.

(3) The residual CCP and each group company must provide such services and facilities as are required to enable a transferee to operate the transferred business, or part of it, effectively.

(4) The duty under sub-paragraph (3) (the “continuity obligation”) may be enforced as if created by contract between the residual CCP or group company and the transferee.

(5) The continuity obligation continues to apply despite the residual CCP or group company entering insolvency, and may not be disclaimed by a liquidator under section 178(2) of the Insolvency Act 1986 or Article 152(1) of the Insolvency (Northern Ireland) Order 1989.

(6) The duty to provide services and facilities in pursuance of the continuity obligation is subject to a right to receive reasonable consideration.

(7) But if the services and facilities provided in pursuance of the continuity obligation were provided to the CCP whose business has been transferred, under an agreement with that CCP, before the property transfer instrument providing for the transfer was made, they are to continue for the duration of that agreement to be provided on the terms set out in that agreement (and sub-paragraph (6) does not apply).

(8) The continuity obligation is not limited to the provision of services or facilities directly to a transferee.

(9) The Bank may, with the consent of the Treasury, by notice to the residual CCP or a group company state that in the Bank’s opinion—

(a) specified activities are required to be undertaken in accordance with the continuity obligation;

(b) activities are required to be undertaken in accordance with the continuity obligation on specified terms.

(10) A notice under sub-paragraph (9) is to be determinative of the nature and extent of the continuity obligation as from the time when the notice is given.

Commencement Information

I1 Sch. 11 para. 89 not in force at Royal Assent, see s. 86(3)

I2 Sch. 11 para. 89 in force at 31.12.2023 by S.I. 2023/1382, reg. 8(b)