REC 2.8 Settlement and clearing services
Schedule to the Recognition Requirements Regulations, Paragraph 4(2)(d)
2Without prejudice to the generality of sub-paragraph [4(1)], the [UK RIE] must ensure that - |
satisfactory arrangements which comply with paragraph 7D are made for securing the timely discharge (whether by performance, compromise or otherwise) of the rights and liabilities of the parties to transactions effected on the [UK RIE] (being rights and liabilities in relation to those transactions); |
Schedule to the Recognition Requirements Regulations, Paragraph 7D
2(1) |
The rules of the [UK RIE] must permit a user or member of a regulated market operated by it to use whatever settlement facility he chooses for a transaction. |
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(2) |
Sub-paragraph (1) only applies where - |
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(a) |
such links and arrangements exist between the chosen settlement facility and any other settlement facility as are necessary to ensure the efficient and economic settlement of the transaction; and |
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(b) |
the [UK RIE] is satisfied that the smooth and orderly functioning of the financial markets will be maintained. |
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Schedule to the Recognition Requirements Regulations, Paragraph 19(2)(b)
2Without prejudice to the generality of sub-paragraph [19(1)], the [UK RCH] must ensure that - |
its clearing services involve satisfactory arrangements for securing the timely discharge (whether by performance, compromise or otherwise) of the rights and liabilities of the parties to transactions in respect of which it provides such services, (being rights and liabilities in relation to those transactions); |
In determining whether there are satisfactory arrangements for securing the timely discharge of the rights and liabilities of the parties to transactions, the FSA may have regard to the UK recognised body's:
- (1)
rules and practices relating to clearing and settlement;
- (2)
arrangements for matching trades and ensuring that the parties are in agreement about trade details;
- (3)
arrangements for making deliveries and payments and, where relevant, for collecting margin and holding collateral, in all relevant jurisdictions;
- (4)
procedures to detect and deal with the failure of a member to settle in accordance with its rules;
- (5)
arrangements for taking action to settle a trade if a member does not settle in accordance with its rules;
- (6)
arrangements for monitoring its members' settlement performance; and
- (7)
(where appropriate) default rules and default procedures.
A UK recognised body will not be regarded as failing to comply with the recognition requirement merely because it is unable to arrange for a specific transaction to be settled.