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.
