{
  "url": "https://openlegislation.uk/companies-act-1989/section-188",
  "json_url": "https://openlegislation.uk/companies-act-1989/section-188.json",
  "legislation": "ukpga/1989/40",
  "legislation_title": "Companies Act 1989",
  "legislation_url": "https://openlegislation.uk/companies-act-1989",
  "path": "section/188",
  "kind": "section",
  "number": "188",
  "heading": "Meaning of “default rules” and related expressions.",
  "text": "(1) In this Part “default rules” means rules of a recognised body which provide for the taking of action in the event of a person (including another recognised body) appearing to be unable, or likely to become unable, to meet his obligations in respect of one or more market contracts connected with the recognised body, ....\n(1A) In the case of a recognised central counterparty, “default rules” includes—\n(a) the default procedures referred to in Article 48 of the EMIR Level 1 Regulation; and\n(b) any rules of the recognised central counterparty which provide for the taking of action in accordance with a request or instruction from a clearing member under the default procedures referred to in Article 4(6) and (7) of the EMIR Level 2 Regulation or Article 4(6) and (7) of the MIFIR Level 2 Regulation in respect of assets or positions held by the recognised central counterparty for the account of an indirect client or group of indirect clients.\n(1B) In the case of a recognised CSD, “default rules” includes the default rules and procedures referred to in Article 41 of the CSD regulation.\n(2) References in this Part to a “defaulter” are to a person in respect of whom action has been taken by a recognised body under its default rules, whether by declaring him to be a defaulter or otherwise; and references in this Part to “default”, “defaulting” and “non-defaulting” shall be construed accordingly.\n(2A) For the purposes of subsection (2), where a recognised central counterparty takes action under the rules referred to in subsection (1A)(b), the action is to be treated as taken in respect of the client providing the indirect clearing services.\n(3) In this Part “default proceedings” means proceedings taken by a recognised body under its default rules.\n(3A) In this Part “default fund contribution” means—\n(a) contribution by a member or designated non-member of a recognised investment exchange to a fund which—\n(i) is maintained by that exchange for the purpose of covering losses arising in connection with defaults by any of the members of the exchange, or defaults by any of the members or designated non-members of the exchange, and\n(ii) may be applied for that purpose under the default rules of the exchange;\n(b) contribution by a member of a recognised clearing house to a fund which—\n(i) is maintained by that clearing house for the purpose of covering losses arising in connection with defaults by any of the members of the clearing house, and\n(ii) may be applied for that purpose under the default rules of the clearing house;\n(c) contribution by a recognised clearing house to a fund which—\n(i) is maintained by another recognised body (A) for the purpose of covering losses arising in connection with defaults by recognised bodies other than A or by any of their members, and\n(ii) may be applied for that purpose under A’s default rules; ...\n(d) contribution by a recognised investment exchange to a fund which—\n(i) is maintained by another recognised body (A) for the purpose of covering losses arising in connection with defaults by recognised bodies other than A or by any of their members, and\n(ii) may be applied for that purpose under A’s default rules.\n(e) contribution by a member of a recognised CSD to a fund which—\n(i) is maintained by that central securities depository for the purpose of covering losses arising in connection with defaults by any of the members of the central securities depository, and\n(ii) may be applied for that purpose under the default rules of the central securities depository; or\n(f) contribution by a recognised CSD to a fund which—\n(i) is maintained by another recognised body (A) for the purpose of covering losses arising in connection with defaults by recognised bodies other than A or by any of their members, and\n(ii) may be applied for that purpose under A’s default rules.\n(4) If a recognised body takes action under its default rules in respect of a person, all subsequent proceedings under its rules for the purposes of or in connection with the settlement of market contracts to which the defaulter is a party shall be treated as done under its default rules.",
  "extent": "E+W+S+N.I.",
  "status": null,
  "version": "current",
  "annotations": [
    {
      "type": "F",
      "label": "F1",
      "text": "Words in s. 188(1) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(24)(a)(i) (with regs. 7(4), 9(1))"
    },
    {
      "type": "F",
      "label": "F2",
      "text": "Words in s. 188(1) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(15)(a)"
    },
    {
      "type": "F",
      "label": "F3",
      "text": "Words in s. 188(1) substituted (1.4.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (S.I. 2013/504), regs. 1(2), 4(17)(a) (with regs. 52-58)"
    },
    {
      "type": "F",
      "label": "F4",
      "text": "Words in s. 188(1) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(24)(a)(ii) (with regs. 7(4), 9(1))"
    },
    {
      "type": "F",
      "label": "F5",
      "text": "Words in s. 188(1) omitted (26.8.2013) by virtue of The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) (No. 2) Regulations 2013 (S.I. 2013/1908), regs. 1(3)(c), 2(10)(a)"
    },
    {
      "type": "F",
      "label": "F6",
      "text": "S. 188(1A) inserted (26.8.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) (No. 2) Regulations 2013 (S.I. 2013/1908), regs. 1(3)(c), 2(10)(b)"
    },
    {
      "type": "F",
      "label": "F7",
      "text": "Words in s. 188(1A)(b) substituted (3.1.2018) by The Companies Act 1989 (Financial Markets and Insolvency) (Amendment) Regulations 2017 (S.I. 2017/1247), regs. 1, 2(4)"
    },
    {
      "type": "F",
      "label": "F8",
      "text": "S. 188(1B) inserted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(24)(b) (with regs. 7(4), 9(1))"
    },
    {
      "type": "F",
      "label": "F9",
      "text": "Words in s. 188(2) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(24)(c) (with regs. 7(4), 9(1))"
    },
    {
      "type": "F",
      "label": "F10",
      "text": "Words in s. 188(2) inserted (1.4.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (S.I. 2013/504), regs. 1(2), 4(17)(b) (with regs. 52-58)"
    },
    {
      "type": "F",
      "label": "F11",
      "text": "S. 188(2A) inserted (26.8.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) (No. 2) Regulations 2013 (S.I. 2013/1908), regs. 1(3)(c), 2(10)(c)"
    },
    {
      "type": "F",
      "label": "F12",
      "text": "Words in s. 188(3) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(24)(c) (with regs. 7(4), 9(1))"
    },
    {
      "type": "F",
      "label": "F13",
      "text": "S. 188(3A) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(15)(b)"
    },
    {
      "type": "F",
      "label": "F14",
      "text": "S. 188(3A)(c)(i) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(24)(d)(i) (with regs. 7(4), 9(1))"
    },
    {
      "type": "F",
      "label": "F15",
      "text": "Word in s. 188(3A)(c) omitted (28.11.2017) by virtue of The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(24)(d)(ii) (with regs. 7(4), 9(1))"
    },
    {
      "type": "F",
      "label": "F16",
      "text": "S. 188(3A)(d)(i) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(24)(d)(iii) (with regs. 7(4), 9(1))"
    },
    {
      "type": "F",
      "label": "F17",
      "text": "S. 188(3A)(e)(f) inserted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(24)(d)(iv) (with regs. 7(4), 9(1))"
    },
    {
      "type": "F",
      "label": "F18",
      "text": "Words in s. 188(4) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(24)(e) (with regs. 7(4), 9(1))"
    },
    {
      "type": "I",
      "label": "I1",
      "text": "S. 188 wholly in force at 25.4.1991 see s. 215 and S.I. 1991/878, art. 2, Sch."
    }
  ],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/ukpga/1989/40/section/188",
    "retrieved_at": "2026-10-29T09:45:50.516840+00:00"
  },
  "licence": "Open Government Licence v3.0",
  "licence_url": "https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/",
  "attribution": "Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives."
}