Regulation 22 Buy-in procedures

(1)

A central counterparty in the United Kingdom that provides clearing services in relation to relevant shares must ensure that—

(a)

where a person who sells shares is not able to deliver the relevant shares for settlement before the end of the period of four working days beginning with the day after the intended settlement date, procedures are automatically triggered for the buy-in of the shares to ensure delivery for settlement,

(b)

where the buy-in of the relevant shares for delivery is not possible, an amount is paid to the buyer of the shares based on the value of the shares to be delivered at the delivery date plus an amount for losses incurred by the buyer of the shares as a result of the settlement failure, and

(c)

the person who fails to settle reimburses to the buyer of the shares all amounts paid pursuant to paragraphs (a) and (b).

(2)

A central counterparty in the United Kingdom that provides clearing services in relation to relevant shares must ensure that where a person who sells relevant shares via its services fails to deliver the shares for settlement by the intended settlement date, the person must make daily payments to the central counterparty for each day that the failure continues.

(3)

The daily payment must be set sufficiently high to act as a deterrent to persons failing to settle.

(4)

In this regulation—

(a)

“buy-in” means the procedure initiated by a central counterparty to acquire and deliver shares of the same description where a seller has failed to deliver the shares for settlement;

(b)

“central counterparty” means a body corporate or unincorporated association which interposes itself between the counterparties to the contracts traded on one or more financial markets, becoming the buyer to every seller and the seller to every buyer;

(c)

“clearing” means the process of establishing positions, including the calculation of net obligations, and ensuring that financial instruments, cash, or both are available to secure the exposures arising from those positions and “clearing services” is to be read accordingly;

(d)

“relevant share” means an admitted share in relation to which one or more requirements in rules made by virtue of regulation 5 applies;

(e)

“settlement” has the meaning given in Article 2(7) of Regulation (EU) No909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No236/2012^f1;

(f)

“working day” means any day other than a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday under the Banking and Financial Dealings Act 1971 in England and Wales.

Annotations

Footnotes

f1: EUR 2014/909.