Financial Services and Markets Act 2023

Bridge central counterparty

29 (1) The second stabilisation option is to transfer all or part of the business of the CCP to a company which meets the requirements of sub-paragraph (2) (a “bridge central counterparty”).

(2) Those requirements are that the company—

(a) is wholly or partially owned by the Bank,

(b) is controlled by the Bank, and

(c) is created for the purposes of receiving a transfer by virtue of this paragraph with a view to maintaining access to critical clearing services and (in due course) selling the CCP or its business.

(3) For that purpose the Bank may make—

(a) one or more property transfer instruments;

(b) one or more share transfer instruments.

(4) The code of practice under paragraph 16 must include provision about the management and control of bridge central counterparties including, in particular, provision about—

(a) setting objectives,

(b) the content of the articles of association,

(c) the content of reports under paragraph 114,

(d) different arrangements for management and control at different stages, and

(e) eventual disposal.

(5) The Bank must, without delay, take all necessary steps to wind up the bridge central counterparty if—

(a) all or substantially all of the bridge central counterparty’s assets, rights and liabilities have been transferred to a third party, or

(b) following a transfer to the bridge central counterparty under this paragraph, no further transfer to the bridge central counterparty is made under this paragraph during the relevant post-transfer period.

(6) Sub-paragraph (5) does not apply if the bridge central counterparty—

(a) has merged with another entity,

(b) has ceased to meet the requirements of sub-paragraph (2)(a) or (b), or

(c) has already been wound up.

(7) “The relevant post-transfer period” means the period of two years beginning with the day of the transfer mentioned in sub-paragraph (5)(a), subject to any extension under sub-paragraph (8).

(8) The Bank may extend (or further extend) the relevant post-transfer period by one year if it is satisfied that the extension—

(a) would support one or more of the outcomes mentioned in sub-paragraph (5)(a) or (6)(a), (b) or (c), or

(b) is necessary to ensure the continuity of critical clearing services.

(9) Where property, rights or liabilities are first transferred by property transfer instrument to a bridge central counterparty and later transferred (whether or not by the exercise of a power under this Schedule) to another company which is wholly owned by the Bank, that other company is an “onward bridge central counterparty”.

(10) An onward bridge central counterparty—

(a) is a bridge central counterparty for the purposes of—

(i) sub-paragraphs (4) to (6),

(ii) paragraph 34(6)(d),

(iii) paragraph 110,

(iv) paragraph 112, and

(v) paragraph 114(5), but

(b) is not a bridge central counterparty for the purposes of—

(i) paragraph 52,

(ii) paragraph 69, and

(iii) paragraph 114(1).