On December 29, the UK Treasury published a summary of responses to its consultation on its proposals to reform Part 7 of the UK Companies Act 1989 and related legislation. Part 7 of the Companies Act 1989 modifies the UK’s general insolvency law to provide systemic protection for recognized investment exchanges and recognized clearinghouses in the event of a default by one of their members  

Respondents generally supported the proposals which relate to: (i) provision for the operation of default funds and cross-margining arrangements; (ii) permitting the use of a defaulting member’s house account surpluses to meet any client account deficits; (iii) an expansion of the definition of a “market contract”; (iv) provisions designed to ensure that client money provisions of other jurisdictions are honored; and (v) the need to reflect certain amendments to UK insolvency law relating to administration.  

The summary includes a technical explanation of the amendments made to the draft regulations as a result of responses to the consultation, and Annex B contains the amended draft Financial Markets and Insolvency Regulations 2009.  

The Treasury intends to lay the regulations before the UK Parliament as soon as possible after the end of January.  

www.hm-treasury.gov.uk/consult_companiesact1989.htm