# The Banking Act 2009 (Restriction of Partial Property Transfers) (Recognised Central Counterparties) Order 2014, Note: Explanatory note


(This note is not part of the Order)
This Order restricts the making of partial property transfer instruments (“partial property transfers”) under the Banking Act 2009 (c.1) (“the Act”) insofar as such partial property transfers relate to recognised central counterparties (“RCCPs”).
Section 89B of the Act applies Part 1 of the Act (special resolution regime) to RCCPs i.e. those central counterparties which are subject to, and recognised pursuant to, the requirements of Regulation (EU) 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ No L 201, 27.7.2012, p 1).
Part 1 of the Act allows the Bank of England to exercise stabilisation powers over a RCCP in certain circumstances. These stabilisation powers include the power to make a partial property transfers in respect of a RCCP, i.e. a property transfer instrument which provides for the transfer of some, but not all, of the property, rights and liabilities of a RCCP. This Order places restrictions on the making of partial property transfer instruments. The Order also makes provision to protect certain interests where a partial property transfer has been made in respect of an RCCP, including security interests, set-off arrangements and netting arrangements.
Article 2 describes the circumstances in which the restictions on the making of partial property transfer instruments set out in articles 3 to 12 of the Order will apply.
Article 3 provides that where a RCCP operates separate default funds for different classes of financial instruments, all the rights and liabilities that attach to each separate default fund must be transferred together, and that where a RCCP operates a single default fund, all rights and liabilities attaching to the single default fund must be transferred together.
Article 4 provides that a partial property transfer may not be made, nor the related continuity powers provided for in sections 64 and 65 of the Act (“the continuity powers”) exercised, in a way that would contravene EU law. The continuity powers allow for the Bank of England to take action to require companies within the same group as the RCCP in respect of which the partial property transfer has been made to continue to provide services and facilities to the acquirer of the transferred business in order to enable it to operate that business effectively.
Article 5 prohibits a partial property transfer or the exercise of any related continuity power from separating from any transferred liability any security that attaches to that liability.
Article 6 prohibits a partial property transfer or the exercising of any related continuity power from rendering unenforceable a market contract (within the meaning of section 155(1)(d) of the Companies Act 1989 (c.40)).
Article 7 places limitations on the exercise of the power provided for in section 34(7)(a) of the Act. Section 34(7)(a) of the Act allows for a partial property transfer to remove or alter the terms of any trust upon which the transferred property was held prior to the transfer.
Article 8 provides for additional limits to apply to reverse property transfers under sections 44 and 46 of the Act. These protections limit what property may be (or may not be) transferred under a reverse transfer.
Article 9 restricts partial property transfers in respect of the property, rights or liabilities of a company that is in the same group as the RCCP. Any such transfers may only be made where they are necessary for carrying on the business, or any part of the business, of any RCCP which is (or, but for the exercise of a stabilisation power, would be) in the same group as the company.
Articles 10 to 12 provide for remedies for contraventions of the Order.
Article 13 amends the Banking Act 2009 (Restriction of Partial Property Transfers) Order 2009 (S.I. 2009/322) (“the 2009 Order”) so as to make it explicit that the 2009 Order does not apply to partial property transfers made under Part 1 of the Act as modified in its application to RCCPs by section 89B of the Act.
A full impact assessment of the effect that this Order will have on the costs of business and the voluntary sector is available from, Her Majesty’s Treasury, 1 Horse Guards Road, London SW1A 2HQ or on http://www.hm-treasury.gov.uk/ and is published alongside the Order on http://www.legislation.gov.uk/.

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Source: https://www.legislation.gov.uk/ukdsi/2014/9780111116234/note (the official version)
Page: https://openlegislation.uk/draft-banking-act-2009-restriction-of-partial-property-transfers-recognised-central-counterparties-order-2014/note
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.