Treasury has made a new set of Financial Markets and Insolvency Regulations that change the insolvency regime that applies to RIEs and RCHs. The Regulations amend several existing pieces of legislation including Part VII Companies Act 1989 and the 1991 Regulations. The changes include:
- a wider definition of “market contracts” to which Part VII applies;
- default fund contributions within the Part VII protections;
- allowing Part VII to take account of administrations on an equivalent basis to bankruptcy and winding up;
- ensuring default rules refer to and take into account crossmargining agreements; and
- allowing extension of RIE and RCH default rules to allow a surplus on a member’s house account to be used to make up a deficit on that member’s client account.
The changes take effect from 15 June.