Section 188: Meaning of "default rules" and related expressions., Companies Act 1989

In this Part "default rules" means rules of a recognised body which provide for the taking of action in the event of a person (including another recognised body) appearing to be unable, or likely to become unable, to meet his obligations in respect of one or more market contracts connected with the recognised body, ....

In the case of a recognised central counterparty, "default rules" includes—

the default procedures referred to in Article 48 of the EMIR Level 1 Regulation; and

any rules of the recognised central counterparty which provide for the taking of action in accordance with a request or instruction from a clearing member under the default procedures referred to in Article 4(6) and (7) of the EMIR Level 2 Regulation or Article 4(6) and (7) of the MIFIR Level 2 Regulation in respect of assets or positions held by the recognised central counterparty for the account of an indirect client or group of indirect clients.

In the case of a recognised CSD, "default rules" includes the default rules and procedures referred to in Article 41 of the CSD regulation.

References in this Part to a "defaulter" are to a person in respect of whom action has been taken by a recognised body under its default rules, whether by declaring him to be a defaulter or otherwise; and references in this Part to "default", "defaulting" and "non-defaulting" shall be construed accordingly.

For the purposes of subsection (2), where a recognised central counterparty takes action under the rules referred to in subsection (1A)(b), the action is to be treated as taken in respect of the client providing the indirect clearing services.

In this Part "default proceedings" means proceedings taken by a recognised body under its default rules.

In this Part "default fund contribution" means—

contribution by a member or designated non-member of a recognised investment exchange to a fund which—

is maintained by that exchange for the purpose of covering losses arising in connection with defaults by any of the members of the exchange, or defaults by any of the members or designated non-members of the exchange, and

may be applied for that purpose under the default rules of the exchange;

contribution by a member of a recognised clearing house to a fund which—

is maintained by that clearing house for the purpose of covering losses arising in connection with defaults by any of the members of the clearing house, and

may be applied for that purpose under the default rules of the clearing house;

contribution by a recognised clearing house to a fund which—

is maintained by another recognised body (A) for the purpose of covering losses arising in connection with defaults by recognised bodies other than A or by any of their members, and

may be applied for that purpose under A's default rules; ...

contribution by a recognised investment exchange to a fund which—

is maintained by another recognised body (A) for the purpose of covering losses arising in connection with defaults by recognised bodies other than A or by any of their members, and

may be applied for that purpose under A's default rules.

contribution by a member of a recognised CSD to a fund which—

is maintained by that central securities depository for the purpose of covering losses arising in connection with defaults by any of the members of the central securities depository, and

may be applied for that purpose under the default rules of the central securities depository; or

contribution by a recognised CSD to a fund which—

is maintained by another recognised body (A) for the purpose of covering losses arising in connection with defaults by recognised bodies other than A or by any of their members, and

may be applied for that purpose under A's default rules.

If a recognised body takes action under its default rules in respect of a person, all subsequent proceedings under its rules for the purposes of or in connection with the settlement of market contracts to which the defaulter is a party shall be treated as done under its default rules.

Section 188: Meaning of "default rules" and related expressions.

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