Financial Services and Markets Act 2023

Compensation scheme

87 (1) The Treasury may by regulations make provision for protecting the financial interests of relevant persons in connection with the making of a stabilisation instrument in respect of a CCP.

(2) For the purposes of sub-paragraph (1) regulations may make provision establishing a scheme, which may for example include provision—

(a) for determining whether relevant persons should be paid compensation or providing for relevant persons to be paid compensation;

(b) for paying any compensation (including payments in instalment or subject to terms and conditions);

(c) under which specified relevant persons become entitled to the proceeds of disposal of things transferred under a share transfer instrument or property transfer instrument.

(3) In making regulations under this paragraph the Treasury must have regard (among other matters) to the desirability of ensuring that any person who is a relevant person before the making of a stabilisation instrument does not receive less favourable treatment than they would have received had—

(a) the CCP entered insolvency immediately before the stabilisation instrument was made, and

(b) all the relevant rules of the CCP been applied in the period leading up to the insolvency.

(4) The regulations may provide for the amount of compensation payable to relevant persons to be determined by a person appointed in accordance with the regulations (an “independent valuer”).

(5) The regulations may make such further provision about independent valuers as the Treasury consider to be appropriate, including (among other things)—

(a) provision about appointment and tenure,

(b) provision for remuneration of independent valuers and their staff,

(c) provision conferring functions on independent valuers (including conferring a discretion),

(d) provision specifying principles to be applied by independent valuers to determine the amount of compensation,

(e) provision about the procedure to be followed by independent valuers,

(f) provision about the liability of independent valuers, and

(g) provision about appeals against decisions by independent valuers (including conferring jurisdiction on a court or tribunal).

(6) The regulations may provide for compensation or other payments to be made by—

(a) the Treasury, or

(b) any other specified persons.

(7) In this paragraph—

• references to “insolvency” include a reference to—

  (a)

  liquidation,

  (b)

  administration,

  (c)

  receivership,

  (d)

  a composition with creditors, and

  (e)

  a scheme of arrangement;

• “relevant person”, in relation to a CCP, means—

  (a)

  clearing members of the CCP;

  (b)

  creditors of the CCP;

  (c)

  shareholders of the CCP;

  (d)

  clients within the meaning of Article 2 of EMIR where they have a contractual relationship as principal with the CCP.

(8) Regulations under this paragraph are subject to the affirmative procedure.