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Baroness Wilcox: My Lords, I thank the Minister. If I have it right, we are speaking to all four orders in one go. I therefore turn first to the domestic infringements and supply of services orders.
While we on these Benches will not be resisting the orders, a number of questions were raised in another place which remain unanswered. The Minister in another place promised a written reply which has not been delivered. I should therefore appreciate reassurance on these matters from the Minister today. The first question was what impact the supply of services order will have on the storage of caravans over the winter where farmers in rural areas have diversified.
The second question referred to the domestic infringements order, on the issue of consumer protection. The Minister listed many activities to be covered, but I am not sure that he specifically dealt with the one in the question that was asked. The question was as follows. There has been a growing trend of highly threatening rogue traders offering re-tarmacked drives. The job, if completed at all, is very
As regards the Enterprise Act 2002 (Anticipated Mergers) Order 2003 and the Enterprise Act 2002 (Protection of Legitimate Interests) Order 2003, we on these Benches are happy to support these orders which strengthen measures that can be taken against anti-competitive mergers and acquisitions. The first extends control of completed mergers to cover anticipated mergers as well, and will close a loophole whereby an organisation can avoid regulatory scrutiny by engaging in transactions over a long period of time. Now the authorities will be able to aggregate transactions over two years. This should be beneficial to business competitiveness and consumers alike by preventing organisations from working around the system.
The protection of legitimate interests order concerns the procedure following the Secretary of State issuing a European intervention notice, and where the matter is one of public interest, it can be referred by the Secretary of State to the Competition Commission. While in principle we are against providing the Secretary of State with more and more powers, these particular orders seem harmless enough and, as I said, we shall happily support them.
Lord Newby: My Lords, we on these Benches also support the orders.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Baroness and to the noble Lord for their support for the orders. I can answer the question raised by the noble Baroness, Lady Wilcox. I am very sorry that I seem to have a draft letter to Mr Andrew Robathan but I do not have any evidence that it has been sent. It seems to me that it ought to have been sent since the matter was considered in Standing Committee in the House of Commons.
As regards caravans, the order would bring the arrangements regarding the storage of caravans, particularly on farms over the winter, within the definition of a supply of services for the purposes of the Enterprise Act, but it does not otherwise affect the legal status of those arrangements. It means that where farmers store caravans on their land, a caravan owner may be considered as a consumer for the purpose of the definition of a domestic infringement under Part 8 of the Enterprise Act. If the storage is supplied in breach of any of the laws which may be enforced under Part 8 as a result of the domestic infringement order, action can be taken by the local trading standards officer and any other general or designated enforcer. Farmers who conduct this business in a lawful and proper way have nothing to fear.
Itinerant tarmac layers are, of course, subject to the same laws as other traders. Orders to stop malpractices by such traders where they can be traced could be obtained if they repeatedly harassed a consumer or if they failed to give consumers notice of their right to cancel the contractthat would be a community infringementor if they gave the consumer false
On Question, Motion agreed to.
Lord McIntosh of Haringey: My Lords, I beg to move the Motions standing in my name on the Order Paper.
Moved, That the draft orders laid before the House on 29th April and 12th May be approved [19th and 20th reports from the Joint Committee].
On Question, Motion agreed to.
Lord McIntosh of Haringey rose to move, That the draft regulations laid before the House on 6th May be approved [20th report from the Joint Committee].
The noble Lord said: My Lords, we are debating today changes to the legislative structure for computerised securities settlement systems that transfers shares, gilts and corporate bonds electronically, without using certificates. CRESTCo operates the only such system in the United Kingdom.
The legal framework under which CRESTCo operates its system is provided by the Uncertificated Securities Regulations (USRs). To ensure that the UK securities settlement infrastructure continues to be able to take advantage of opportunities for market developments there has been a rolling programme of reform of the USRs. They were first introduced in 1995, extended in 2000 and then re-enacted with modifications in 2001. The statutory instrument before us today continues that reform by amending the regulations in order to permit the evidencing and transfer of title of electronic equivalents of money market instruments (MMIs).
The new regulations, by allowing for the creation of electronic equivalents of MMIs, are fulfilling the final recommendation of the Bank of England's Securities Settlement Priorities Review, published in 1998. There has been strong support from the City in favour of allowing these securities to be issued in electronic form, title to be evidenced by names on an electronic register and their integration into the CREST settlement system. Settlement is an important source of revenue and one determinant of the location of financial activity. Since issuers and investors nowadays have an ever wider choice over where they do business, it is essential that the United Kingdom remains attractive to them. The introduction of electronic equivalents of MMIs is another step forward in keeping London the leading international financial centre in the world. It is against this background that the Government are seeking approval for the relevant statutory instrument.
As I have already said, the statutory instrument will permit the evidencing and transfer of title of dematerialised equivalents to MMIs. MMIs are short-term debt securities; they mostly have a maturity of less than one year. They are used to meet the short-term funding needs of the Government (in the form of Treasury Bills), financial institutions and other companies. Holders of MMIs are almost exclusively companies rather than individuals. MMIs are issued in the form of certificates. They are negotiable bearer instruments meaning that ownership can be passed by physical delivery of a certificate. Each MMI is unique and cannot be used interchangeably with other units.
Dematerialisation, as the name implies, involves the removal of paper. In order for an MMI to be issued and transferred electronically, it will lose its uniqueness. At the same time it will cease to be a negotiable bearer instrument. This change in characteristic means that while performing the same economic functions, electronic equivalents of MMIs will be distinct securities. In the amended regulations a new electronic equivalent to the MMI has been defined, the Eligible Debt Security or EDS.
An EDS will be a so-called registered security. Legal title will be provided to the holder by entry of his name on the "Operator Register of Eligible Debt Securities", a computer-held record of ownership. A change in the register will represent a change in legal title. Furthermore, individual EDSs will be interchangeable so increasing flexibility for the issuer of the securities and thus allowing better tailoring to the needs of both investors and issuers. The modified regulations take account of the different legal characteristics of the EDS.
Legislative change is necessary to allow for the creation of EDSs. The current scope of the Uncertificated Securities Regulations, which make provision for electronic transfer and evidencing of ownership of securities, does not cover EDSs. The regulations we are debating amend the Uncertificated Securities Regulations 2001, to enable Eligible Debt Securities to be settled in CREST and for title to be provided by entry on the Operator Register operated by CREST; that is, electronic transfer of title
The definition of an eligible debt security in the regulations has been deliberately cast in fairly broad terms. The breadth of the definition is intended to maintain sufficient flexibility and at the same time allow for the possible future development of new kinds of securities.
Why are we making the changes? Basically, there are three reasons. First, they will underpin financial stability by allowing settlement of short-term debt securities to take place in Crest with full delivery versus payment in central bank money. Secondly, they will reduce the costs of raising capital by removing the need to print and store large quantities of certificates. Thirdly, they will help to maintain the UK's competitiveness as a location for financial services by providing a modern and efficient securities settlement environment for London's financial markets.
Our objective in the amended regulations is a simple onethe electronic legal transfer of title and settlement of eligible debt securities. We believe that the change will enhance the competitiveness of the infrastructure of UK financial markets, and will be warmly welcomed by the City. I commend the regulations to the House.
Moved, That the draft regulations laid before the House on 6th May be approved [20th report from the Joint Committee].(Lord McIntosh of Haringey.)
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