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(a) for integrating the provisions of this Part with the general law of insolvency, and
(b) for adapting the provisions of this Part in their application to overseas investment exchanges and clearing houses.
(3) Regulations under this section may add to, amend or repeal any of the provisions of this Part or provide that those provisions have effect subject to such additions, exceptions or adaptations as are specified in the regulations.'.-- [Mr. Redwood.]
Brought up, read the First and Second time, and added to the Bill.
New clause 42-- Construction of references to parties to market contracts
.--(1) Where a person enters into market contracts in more than one capacity, the provisions of this Part apply (subject as follows) as if the contracts entered into in each different capacity were entered into by different persons.
(2) References in this Part to a market contract to which a person is a party include (subject as follows, and unless the context otherwise requires) contracts to which he is party as agent. (3) The Secretary of State may by regulations--
(a) modify or exclude the operation of subsections (1) and (2), and
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(b) make provision as to the circumstances in which a person is to be regarded for the purposes of those provisions as acting in different capacities.'.-- [Mr. Redwood.]Brought up, read the First and Second time, and added to the Bill.
Madam Deputy Speaker-- then proceeded to put forthwith the Question on amendments relating to parts VI and VII of the Bill standing in the name of a member of the Government.
Clause 139
Temporary restrictions on share dealings
Amendments made : No. 152, page 158, line 2, leave out also applies' and insert
and section 736A of that Act also apply'.
No. 153, in page 158, line 4, leave out it applies' and insert they apply'.
No. 154, in page 158, line 6, leave out subsection (5) of that section' and insert
subsections (8) and (9) of section 736A'.
No. 155, in page 158, line 23, at end insert--
(2) This section does not apply in relation to any merger reference made before the passing of this Act.'.-- [Mr. Redwood.]
Clause 140
Obtaining control by stages
Amendment made : No. 156, in page 159, line 25, at end insert-- (2) This section does not apply in relation to any merger reference made before the passing of this Act.'.-- [Mr. Redwood.]
Schedule 19
Amendments about mergers and related matters
Amendments made : No. 157, in page 281, line 27, at end insert-- (2) This paragraph does not apply in relation to any newspaper merger reference made before the passing of this Act.'.
No. 158, in page 282, line 27, at end insert--
9A. Paragraphs 4 to 9 (and the repeals in Schedule 22 corresponding to paragraphs 7 and 8(a)) do not apply in relation to any merger reference made before the passing of this Act.'. No. 159, in page 282, line 48, at end insert--
(2) This paragraph does not apply in relation to any report made before the passing of this Act.'.
No. 160, in page 283, line 37, at end insert--
(5) Sub-paragraphs (1) and (4) (and the repeal in Schedule 22 corresponding to sub-paragraph (4) ) do not apply in relation to any report made before the passing of this Act.'.
No. 161, in page 283, line 44, after makes,' insert has made'. No. 162, in page 283, line 48, after makes,' insert has made'. No. 163, in page 284, line 3, at end insert--
(4) The amendments made by sub-paragraphs (1) to (3) have effect in relation to the making of any order under section 89 of the Fair Trading Act 1973 after the passing of this Act, whether the principal order (within the meaning of that section) was made before or after that time.'.
No. 164, in page 284, line 21, at end insert--
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(2) This paragraph does not apply in relation to any report made before the passing of this Act.'.No. 165, in page 284, line 46, at end insert--
(2) This paragraph has effect in relation to the laying of any draft order under paragraph 4 of Schedule 9 to the Fair Trading Act 1973 after the passing of this Act, whether the notice under that Schedule was published before or after that time.'.
No. 166, in page 285, line 11, leave out
commencement of paragraph 21 of Schedule 19 to'
and insert passing of'.
No. 167, in page 285, line 17, leave out
commencement of paragraph 22 of Schedule 19 to'
and insert passing of'.-- [Mr. Redwood.]
New clause 35-- Powers of Secretary of State to give directions--
Clause 144
Introduction
Amendments made : No. 168, in page 161, line 33, leave out to 160' and insert
to 155, (Powers of Secretary of State to give directions), (Application to determine whether default proceedings to be taken), 157 to 159, (Certain money market institutions) and (Settlement arrangements provided by the Bank of England)'.
No. 169 in page 161, line 39, leave out 165' and insert
(Application of margin not affected by certain other interests), (Priority of floating market charge over subsequent charges) and 166'.
Clause 145
Market contracts
Amendment made : No. 170, in page 162, line 12, leave out sub-paragraph (ii) and (iii).-- [Mr. Redwood.]
Clause 146
Additional requirements for recognition : default rules, &c
Amendments made : No. 171, in page 163, line 3, leave out Part' and insert section'.
No. 172, in page 163, line 7, leave out The Secretary of State' and insert
Where the Secretary of State gives such a notice, he.
No. 173, in page 163, line 15, leave out
notice is given under subsection (3)'
and insert the notice was given'.-- [Mr. Redwood.]
Schedule 20
Additional requirements for recognition
Amendments made : No. 174, in page 285, line 41, leave out paragraphs 1 to 4 and insert
1.--(1) The exchange must have default rules which, in the event of a member of the exchange appearing to be unable to meet his obligations in respect of one or more market contracts, enable action to be taken in respect of unsettled market contracts to which he is party.
(2) The rules may authorise the takng of the same or similar action in relations to a member who appears to be likely to become unable to meet his obligations in respect of one or more market contracts. (3) The rules must enable action to be taken in respect of all unsettled market contracts, other than those entered into by a recognised clearing house for the purposes of or in connection with the provision of clearing services for the exchange.
(4) As regards contracts entered into by the exchange for the purposes of or in connection with the provision of its own
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clearing services, the rules must contain provision corresponding to that required by paragraphs 9 to 11 below in the case of a UK clearing house.(5) As regards other contracts the rules must contain provision complying with paragraphs 2 and 3 below.
Content of rules
2. (1) The rules must provide for all rights and liabilities between those party as principal to unsettled market contracts to which the defaulter is party as principal to be discharged and for there to be paid by one party to the other such sum of money (if any) as may be determined in accordance with the rules.
(2) The rules must further provide--
(a) for the sums so payable in respect of different contracts between the same parties to be aggregated or set off so as to produce a net sum, and
(b) for the certification by or on behalf of the exchange of the net sum payable or, as the case may be, of the fact that no sum is payable.
(3) The rules may make special provision with respect to, or exclude from the provisions required by sub-paragraphs (1) and (2), contracts of any description prescribed for the purposes of this sub-paragraph by regulations made by the Secretary of State. Notification to other parties affected
3. The exchange must have adequate arrangements for securing that--
(a) parties to unsettled market contracts with a defaulter acting as principal are notified as soon as reasonably practical of the default and of any decision taken under the rules in relation to contracts to which they are a party ; and
(b) parties to unsettled market contracts with a defaulter acting as agent and the defaulter's principals are notified as soon as reasonably practicable of the default and of the identity of the other party to the contract.
Application of default rules to designated non-members
4.--(1) The rules may make the same or similar provision in relation to designated non-members as in relation to members of the exchange.
(2) If such provision is made, the exchange must have adequate procedures--
((a) for designating the persons, or descriptions of person, in respect of whom action may be taken,
(b) for keeping under review the question which persons or descriptions of persons should be or remain so designated, and (
(c) for withdrawing such designation.
(3) The procedures shall be designed to secure that a person is not or does not remain designated if failure by him to meet his obligations in respect of one or more market contracts would be unlikely adversely to affect the operation of the market, and that a description of persons is not or does not remain designated if failure by a person of that description to meet his obligations in respect of one or more market contracts would be unlikely adversely to affect the operation of the market.
(4) The exchange must have adequate arrangements--
(a) for bringing a designation or withdrawal of designation to the attention of the person or description of persons concerned, and (
(b) where a description of persons is designated, or the designation of a description of persons is withdrawn, for ascertaining which persons fall within that description.'. No. 175, in page 287, line 23, leave out sub- paragraph (1) and insert
(1) The clearing house must have default rules which, in the event of a member of the clearing house appearing to be unable to meet his obligations in respect of one or more market contracts, enable action to be taken to close out his position in relation to all unsettled market contracts to which he is a party.'.
No. 176, in page 287, line 40, after by' insert or on behalf of'.
No. 177, in page 287, line 44, after by' insert or on behalf of'.
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No. 178, in page 288, line 16, at end insert--(3) The reference in paragraph 9 to the rights and liabilities of a defaulter under or in respect of an unsettled market contract does not include, where he acts as agent, rights or liabilities of his arising out of the relationship of principal and agent.'.
No. 179, in page 288, line 32, leave out paragraph 14 and insert
14.--(1) The rules of the clearing house must provide that, in the event of a default, margin provided by the defaulter for his own account is not to be applied to meet a shortfall on a client account.
(2) This is without prejudice to the requirements of any relevant regulations under section 55 of the Financial Services Act 1986 (clients' money).'.
No. 180, in page 289, line 3, leave out paragraph 15 and insert-- 15.--(1) The rules and practices of the body, together with the law of the country in which the body's head office is situated, must be such as to provide adequate procedures for dealing with the default of persons party to market contracts connected with the body.
(2) The reference in sub-paragraph (1) to default is to a person being unable to meet his obligations.'.-- [Mr. Redwood.]
Clause 148
Modifications of the law of insolvency
Amendment made : No. 181, in page 163, line 31, at end insert-- (1A) So far as those provisions relate to insolvency proceedings in respect of a person other than a defaulter, they apply in relation to--
(a) proceedings in respect of a member or designated non-member of a recognised investment exchange or a member of a recognised clearing house, and
(b) proceedings in respect of a party to a market contract begun after a recognised investment exchange or recognised clearing house has taken action under its default rules in relation to a person party to the contract as principal,
but not in relation to any other insolvency proceedings, notwithstanding that rights or liabilities arising from market contracts fall to be dealt with in the proceedings.
(1B) The reference in subsection (1A)(b) to the beginning of insolvency proceedings is to--
(a) the presentation of a bankruptcy petition or a petition for sequestration of a person's estate, or
(b) the presentation of a petition for an administration order or a winding -up petition or the passing of a resolution for voluntary winding up, or
(c) the appointment of an administrative receiver.'.-- [Mr. Redwood.]
Clause 149
Proceedings of exchange or clearing house take precedence over insolvency procedures
Amendments made : No. 182, in page 164, line 5, leave out from 1986' to shall' in line 6 and insert or the Bankruptcy (Scotland) Act 1985'.
No. 183, in page 164, leave out lines 13 to 15 and insert This does not prevent a relevant office-holder from afterwards seeking to recover any amount under section 153(4) or 154(3) or prevent the court from afterwards making any such order or decree as is mentioned in section 155(1) or (2) (but subject to subsections (3) and (4) of that section).'.-- [Mr. Redwood.]
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Clause 151
Supplementary provisions as to default proceedings
Amendments made : No. 184, in page 165, line 36, leave out or have been pending' and insert
pending or could be taken, or have been or could have been taken.'.
No. 185, in page 165, line 39, leave out
the Bankruptcy (Scotland) Act 1985'
and insert
any rule of law in Scotland to the like effect as the said section 285, in the Bankruptcy (Scotland) Act 1985 or in the Debtors (Scotland) Act 1987 as to the effect of sequestration,'.-- [Mr. Redwood.]
Clause 153
Net sum payable on completion of default proceedings
Amendments made : No. 186, in page 166, line 21, leave out from upon' to to' and insert--
proceedings under its default rules being duly completed in accordance with this Part,'.
No. 187, in page 166, line 34, leave out 129' and insert 247'. No. 188, in page 166, line 47, leave out subsection (4) and insert--
(4) However, where (or to the extent that) a sum is taken into account by virtue of subsection (2)(b) or (3)(b) which arises from a contract entered into at a time when the creditor had notice-- (
(a) that a bankruptcy petition or, in Scotland, a petition for sequestration was pending, or
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