15.—(1) A ring-fenced body may incur a financial institution exposure provided that both the following conditions are satisfied—
(a)the purpose of the transaction giving rise to the exposure is—
(i)to provide finance or make a payment in connection with the supply of goods or services by or to a person or an undertaking which is not a relevant financial institution; or
(ii)to guarantee or otherwise provide an indemnity or security for the obligations of a customer of the ring-fenced body or a third party in connection with the supply of goods or services by or to a person or an undertaking which is not a relevant financial institution;
(b)the ring-fenced body enters into [F1a relevant agreement, which specifies, or together with other connected agreements specifies]—
(i)the supplies of goods or services to which the transaction relates, and
(ii)the maximum payments which the ring-fenced body may be required to make under [F2the relevant agreement and any connected agreements].
[F3(1A) For the purpose of paragraph (1)(b)—
(a)an agreement is a “relevant agreement” if—
(i)it gives effect to the transaction described in paragraph (1)(a) (“the finance transaction”),
(ii)it is made under a master agreement which gives effect to the finance transaction, or
(iii)it is one of a number of connected agreements entered into in relation to the finance transaction;
(b)an agreement is a “connected agreement” if it is one of a number of agreements which—
(i)are entered into by a party to the finance transaction, or to the supply of goods or services to which the finance transaction relates, with one or more other such parties; and
(ii)collectively give effect to the finance transaction.]
(2) For the purpose of paragraph (1)(b)(ii), the maximum payments payable under the agreement may be expressed—
(a)as a defined sum, or
(b)as a multiple of an average price of a commodity, where the average price is determined by reference to prices quoted on a specified index of prices for that commodity over a specified period, and for these purposes “specified” means specified in the agreement.
Textual Amendments
F1Words in art. 15(1)(b) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(3)(a)(i)
F2Words in art. 15(1)(b)(ii) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(3)(a)(ii)
F3Art. 15(1A) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(3)(b)
Commencement Information
I1Art. 15 in force at 1.1.2019, see art. 1(3)