# The Financial Markets and Insolvency Regulations 1998, Note: Explanatory note


(This note is not part of the Regulation)
The Regulations apply the provisions of Part VII of the Companies Act 1989 (“the 1989 Act”) to certain contracts entered into by investment exchanges and clearing houses recognised in accordance with the provisions of the Financial Services Act 1986 (c. 60). The contracts concerned are those entered into by an exchange or clearing house with its members for the purpose of settling transactions in investments entered into by the member otherwise than on a recognised investment exchange.
Regulation 3 amends the definition of “market contracts” in relation to a recognised investment exchange currently set out in section 155(2) of the 1989 Act by amending subsection (2)(b) so that it covers any contract entered into by the exchange with its member for the purpose of settling the member’s transactions in investments, whether or not the transaction was effected on the exchange. Subsection (2)(a) is also amended to make clear that it applies only to contracts entered into by the member of the exchange with a third party.
Regulation 4 amends the definition of “market contracts” in relation to a recognised clearing house currently set out in section 155(3) so that it includes contracts entered into by the clearing house with a member for the purpose of settling the member’s transactions in investments whether or not that transaction was effected on a recognised investment exchange with which the clearing house had a clearing arrangement.
Regulations 5 and 6 make amendments to Schedule 21 to the 1989 Act to take account of the fact that the default rules referred to in that Schedule now include default rules relating to off exchange contracts because the amended definition of “market contracts” affects the definition of the term “default rules” in section 188 of the 1989 Act. Schedule 21 sets out additional recognition criteria which, by virtue of section 156 of the 1989 Act, supplement the criteria set for investment exchanges and clearing houses in the relevant provisions of the Financial Services Act 1986.

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Source: https://www.legislation.gov.uk/uksi/1998/1748/note (the official version)
Page: https://openlegislation.uk/financial-markets-and-insolvency-regulations-1998/note
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.