Regulation 54 Credit cover: requirements

(1)

A person who is under an obligation to provide credit cover must do so—

(a)

for at least the required amount; and

(b)

in a permissible form (or partly in one permissible form and partly in the other).

(2)

The following are permissible forms of credit cover—

(a)

a letter of credit which meets the conditions in paragraph (3);

(b)

a cash deposit in a bank account specified by the Settlement Body in accordance with paragraph (4).

(3)

The conditions in this paragraph are that the letter of credit is—

(a)

issued by a qualifying bank;

(b)

in sterling;

(c)

available for payment at a London branch of the issuing bank against a notice of drawing delivered by the Settlement Body; and

(d)

valid—

(i)

at least until the end of the credit obligation period; or

(ii)

if the credit obligation period is more than 6 months, for a period of not less than 6 months.

(4)

A bank account specified by the Settlement Body for the purpose of paragraph (2)(b) must—

(a)

be an interest bearing account in the name of the Settlement Body;

(b)

be used only for the purpose of holding credit cover provided under these Regulations; and

(c)

be an account the funds in which may only be withdrawn by or on behalf of the Settlement Body.