Regulation 2 Interpretation

In these Regulations—

• F1“the 2000 Act” means the Financial Services and Markets Act 2000;

• F2“administration” and “administrator” shall be interpreted in accordance with the modifications made by the enactments mentioned in paragraph (5);

• F3“business day” shall cover both day and night-time settlements and shall encompass all events happening during the business cycle of a system;

• F4“central bank” means–

  1. (a)

     the Bank of England; or

  2. (b)

     any central bank (or other monetary authority) of a country or territory outside the United Kingdom that is a central bank (or other monetary authority) of an EEA state (including the European Central Bank) or a member of the Bank for International Settlements (including the Bank for International Settlements), as may be notified by the Bank of England to the Treasury from time to time;

• “central counterparty” means a body corporate or unincorporated association interposed between the institutions in a F5... system and which acts as the exclusive counterparty of those institutions with regard to transfer orders;

• “charge” means any form of security, including a mortgage and, in Scotland, a heritable security;

• “clearing house” means a body corporate or unincorporated association which is responsible for the calculation of the net positions of institutions and any central counterparty or settlement agent in a F6... system;

• “collateral security” means any realisable assets provided under a charge or a repurchase or similar agreement, or otherwise (including F7credit claims and money provided under a charge)—

  1. (a)

     for the purpose of securing rights and obligations potentially arising in connection with a F8... system (“collateral security in connection with participation in a ... system”); or

  2. (b)

     to a central bank for the purpose of securing rights and obligations in connection with its operations in carrying out its functions as a central bank (“collateral security in connection with the functions of a central bank”);

• “collateral security charge” means, where collateral security consists of realisable assets (including money) provided under a charge, that charge;

• “credit claims” means pecuniary claims arising out of an agreement whereby a credit institution grants credit in the form of a loan;

• F9“credit institution” means a body corporate or unincorporated association whose head office is in the United Kingdom and whose business is to take deposits or other repayable funds from the public and to grant credits for its own account;

• “creditors' voluntary winding-up resolution” means a resolution for voluntary winding up (within the meaning of the Insolvency Act 1986^f1 F10or the Insolvency (Northern Ireland) Order 1989) where the winding up is a creditors' winding up (within the meaning of that Act or that Order);

• “default arrangements” means the arrangements put in place by a designated system F11or by a system which is an interoperable system in relation to that system to limit systemic and other types of risk which arise in the event of a participant F12or a system operator of an interoperable system appearing to be unable, or likely to become unable, to meet its obligations in respect of a transfer order, including, for example, any default rules within the meaning of Part VII F13or Part V or any other arrangements for—

  1. (a)

     netting,

  2. (b)

     the closing out of open positions, F14...

  3. (c)

     the application or transfer of collateral security; F15or

  4. (d)

     F16the transfer of assets or positions on the default of a participant in the system;

• “defaulter” means a person in respect of whom action has been taken by a designated system under its default arrangements;

• F17“designated system” means—

  1. (a)

     a system which is declared by a designation order for the time being in force to be a designated system for the purposes of these Regulations; or

  2. (b)

     a system which has temporary designation in accordance with Part 4 of the Financial Markets and Insolvency (Amendment and Transitional Provision) (EU Exit) Regulations 2019;

• F18“designating authority” means—

  1. (a)

     in the case of a system which is, or the operator of which is, a recognised investment exchange for the purposes of the 2000 Act, the FCA;

  2. (b)

     in any other case, the Bank of England;

• “designation order” has the meaning given by regulation 4;

• “EEA State” means a State which is a Contracting Party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992^f2 as adjusted by the Protocol signed at Brussels on 17th March 1993^f3;

• F19...

• F20“the FCA” means the Financial Conduct Authority;

• “guidance”, in relation to a designated system, means guidance issued or any recommendation made by it which is intended to have continuing effect and is issued in writing or other legible form to all or any class of its participants or users or persons seeking to participate in the system or to use its facilities and which would, if it were a rule, come within the definition of a rule;

• F21“indirect participant” means an institution, central counterparty, settlement agent, clearing house or system operator—

  1. (a)

     which has a contractual relationship with a participant in a designated system that enables the indirect participant to effect transfer orders through that system, and

  2. (b)

     the identity of which is known to the system operator;

• F22“insolvency proceedings” means any collective measure provided for in the law applicable within the United Kingdom or any part of the United Kingdom, or a third country, either to wind up the participant or to reorganise it, where such measure involves the suspending of, or imposing limitations on, transfers or payments;

• “institution” means—

  1. (a)

     a credit institution;

  2. (aa)

     F23an electronic money institution within the meaning of regulation 2(1) of the Electronic Money Regulations 2011;

  3. (ab)

     F24an authorised payment institution or small payment institution as defined in regulation 2(1) of the Payment Services Regulations 2017 F25...;

  4. (b)

     F26an investment firm as defined in Article 2.1A of Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012;

  5. (c)

     a public authority or publicly guaranteed undertaking;

  6. (d)

     F27any undertaking whose head office, registered office or place of residence is outside the United Kingdom and whose functions correspond to those of a credit institution, an electronic money institution, an authorised payment institution, a small payment institution, or an investment firm as defined in sub-paragraphs (a), (aa), (ab), and (b) respectively above; or

  7. (e)

     any undertaking which is treated by the designating authority as an institution in accordance with regulation 8(1),

  which participates in a F28... system and which is responsible for discharging the financial obligations arising from transfer orders which are effected through the system;

• “interoperable system” in relation to a system (“the first system”), means a second system whose system operator has entered into an arrangement with the system operator of the first system that involves cross-system execution of transfer orders;

• “netting” means the conversion into one net claim or obligation of different claims or obligations between participants resulting from the issue and receipt of transfer orders between them, whether on a bilateral or multilateral basis and whether through the interposition of a clearing house, central counterparty or settlement agent or otherwise;

• F29“Part V” means Part V of the Companies (No. 2) (Northern Ireland) Order 1990;

• “Part VII” means Part VII of the Companies Act 1989^f4;

• “participant” means—

  1. (a)

     an institution,

  2. (aa)

     F30a system operator;

  3. (b)

     a body corporate or unincorporated association which carries out any combination of the functions of a central counterparty, a settlement agent or a clearing house, with respect to a system, or

  4. (c)

     an indirect participant which is treated as a participant, or is a member of a class of indirect participants which are treated as participants, in accordance with regulation 9;

• “the PRA” means the Prudential Regulation Authority;

• “protected trust deed” and “trust deed” shall be construed in accordance with section 73(1) of the Bankruptcy (Scotland) Act 1985^f5 (interpretation);

• “relevant office-holder” means—

  1. (a)

     the official receiver;

  2. (b)

     any person acting in relation to a company as its liquidator, provisional liquidator, or administrator;

  3. (c)

     any person acting in relation to an individual (or, in Scotland, any debtor within the meaning of the Bankruptcy (Scotland) Act 1985) as his trustee in bankruptcy or interim receiver of his property or as permanent or interim trustee in the sequestration of his estate or as his trustee under a protected trust deed; F31...

  4. (d)

     any person acting as administrator of an insolvent estate of a deceased person; F32or

  5. (e)

     F33any person appointed pursuant to insolvency proceedings of a country or territory outside the United Kingdom;

  and in sub-paragraph (b), “company” means any company, society, association, partnership or other body which may be wound up under the Insolvency Act 1986 F34or the Insolvency (Northern Ireland) Order 1989;

• “rules”, in relation to a designated system, means rules or conditions governing the system with respect to the matters dealt with in these Regulations;

• F35“securities” means (except for the purposes of the definition of “charge”) any instruments referred to in Part 1 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;

• “settlement account” means an account at a central bank, a settlement agent or a central counterparty used to hold funds or securities (or both) and to settle transactions between participants in a F36... system;

• “settlement agent” means a body corporate or unincorporated association providing settlement accounts to the institutions and any central counterparty in a F37... system for the settlement of transfer orders within the system and, as the case may be, for extending credit to such institutions and any such central counterparty for settlement purposes;

• “the Settlement Finality Directive” means Directive 98/26/EC of the European Parliament and of the Council of 19th May 1998 on settlement finality in payment and securities settlement systems^f6 F38, as last amended by Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23rd July 2014 on improving securities settlement in the European Union and on central securities depositories;

• “system” means a formal arrangement—

  1. (a)

     between two or more participants, without counting a settlement agent, a central counterparty, a clearing house or an indirect participant, with common rules and standardised arrangements for the clearing, whether or not through a central counterparty, or execution of transfer orders between the participants; and

  2. (b)

     governed by the law of a country or territory chosen by the participants; the participants may, however, only choose the law of a country or territory in which at least one of them has its head office;

• “system operator” means the entity or entities legally responsible for the operation of a system. A system operator may also act as a settlement agent, central counterparty or clearing house;

• “third country” means a country or territory other than the United Kingdom;

• “transfer order” means—

  1. (a)

     an instruction by a participant to place at the disposal of a recipient an amount of money by means of a book entry on the accounts of a credit institution, a central bank F39, a central counterparty or a settlement agent, or an instruction which results in the assumption or discharge of a payment obligation as defined by the rules of a designated system (“a payment transfer order”); or

  2. (b)

     an instruction by a participant to transfer the title to, or interest in, securities by means of a book entry on a register, or otherwise (“a securities transfer order”);

• F40“winding-up” means—

  1. (a)

     winding up by the court or creditors’ voluntary winding up within the meaning of the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989 (but does not include members’ voluntary winding up within the meaning of that Act or that Order);

  2. (b)

     sequestration of a Scottish partnership under the Bankruptcy (Scotland) Act 1985;

  3. (c)

     F41...

  F42and shall be interpreted in accordance with the modifications made by the enactments mentioned in paragraph (5); and “liquidator” shall be construed accordingly.

In these Regulations—

For the purposes of these regulations, references to insolvency proceedings do not include crisis prevention measures or crisis management measures taken in relation to an undertaking F46... unless—

For the purposes of paragraph (2A)—

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

References in these Regulations to things done, or required to be done, by or in relation to a designated system shall, in the case of a designated system which is neither a body corporate nor an unincorporated association, be treated as references to things done, or required to be done, by or in relation to the operator of that system.

The enactments referred to in the definitions of “administration”, “administrator”, “liquidator” and “winding up” in paragraph (1), and in paragraph (2)(a)(ii), are—

For the purposes of these Regulations—

For the purposes of sub-paragraph (b) of the definition of “central bank”, the designating authority must publish on its website a list of central banks.