Financial Services and Markets Act 2023

Suspension of termination rights U.K.

99 (1) The Bank may suspend the termination right of any party to a qualifying contract (other than a party who is an excluded person).

(2) A contract is a “qualifying contract” for the purpose of this paragraph if—

(a) one of the parties to the contract is a CCP in respect of which the Bank is exercising a stabilisation power (a “CCP under resolution”) and all the obligations under the contract to make a payment, make delivery or provide collateral continue to be performed, or

(b) one of the parties to the contract is a subsidiary of a CCP under resolution and the condition in sub-paragraph (3) is met.

(3) The condition is that—

(a) the obligations of the subsidiary are guaranteed or otherwise supported by the CCP under resolution,

(b) the termination rights under the contract are triggered by the insolvency or the financial condition of the CCP under resolution, and

(c) if a property transfer instrument has been made in relation to the CCP under resolution—

(i) all the assets and liabilities relating to the contract have been or are being transferred to, or assumed by, a single transferee, or

(ii) the Bank is providing adequate protection for the performance of the obligations of the subsidiary under the contract in any other way.

(4) The Bank must have regard to the impact a suspension might have on the orderly functioning of the financial markets before exercising the power in sub-paragraph (1).

(5) The power under sub-paragraph (1) must be exercised by way of provision in a share transfer instrument, property transfer instrument, resolution instrument or third-country instrument.

(6) A suspension imposed under sub-paragraph (1)—

(a) begins when the instrument providing for the suspension is first published, and

(b) must end no later than midnight at the end of the first business day following the day on which that instrument is published.

(7) A person may exercise a termination right under a contract before the expiry of the suspension if that person is given notice by the Bank that the rights and liabilities of the CCP under resolution covered by the contract are not—

(a) to be transferred to another undertaking through the exercise of a stabilisation power, or

(b) to be made subject to a share transfer instrument, property transfer instrument, resolution instrument or third-country instrument.

(8) If—

(a) no notice has been given by the Bank under sub-paragraph (7), and

(b) a termination right has been triggered otherwise than through the exercise of a stabilisation power or the imposition of a suspension under sub-paragraph (1) (or the occurrence of an event directly linked to the exercise of a stabilisation power),

a person may, on the expiry of the suspension, exercise the termination right in accordance with the terms of the contract.

(9) But, where the rights and liabilities of the CCP under resolution or the subsidiary under the contract have been transferred to another undertaking, sub-paragraph (8) applies only if the event giving rise to the termination right has been triggered by that undertaking.

(10) For the purposes of this paragraph, “termination right” means—

(a) a right to terminate a contract,

(b) a right to accelerate, close out, set-off or net obligations, or any similar provision that suspends, modifies or extinguishes an obligation of a party to the contract, or

(c) a provision that prevents an obligation from arising under the contract.

Commencement Information

I1 Sch. 11 para. 99 not in force at Royal Assent, see s. 86(3)

I2 Sch. 11 para. 99 in force at 31.12.2023 by S.I. 2023/1382, reg. 8(b)