Shearman & Sterling LLP | Financial Regulatory Developments Focus | HM Treasury Consults on New Rules for Financial Market Infrastructure Special Administration Regime
Financial Regulatory Developments Focus
  • HM Treasury Consults on New Rules for Financial Market Infrastructure Special Administration Regime

    HM Treasury published a consultation paper on rules for a financial market infrastructure special administration regime. A form of special administration for certain financial market infrastructure companies, excluding central counterparties, was introduced by The Financial Services (Banking Reform) Act 2013, known as FMI administration. CCPs are already subject to the special resolution regime in the Banking Act 2009. The entities covered by the FMI administration regime are non-CCP operators of payment systems and central securities depositories. HM Treasury is seeking views on new rules, and modifications to existing general insolvency rules, required to facilitate the effective functioning of an FMI administration. The proposed rules outline the application procedure for an FMI administration order and specify the application of the Insolvency (England and Wales) Rules 2016 with modifications.

    An application for FMI administration must demonstrate that the company is unable to pay its debts, likely to be unable to pay its debts or that it would be just and equitable (disregarding the objective of the FMI administration) to wind up the company. The new and modified insolvency rules set out the functions that the FMI administrator would be required to perform, such as the provision of a statement of affairs of the company, and the determination of the FMI administrator’s remuneration. Responses to the consultation are due by January 15, 2017.

    HM Treasury will update rules following receipt of comments and will then consult the Insolvency Rules Committee prior to the rules being implemented in 2017. The UK Government plans to bring the new FMI administration provisions into force concurrently with the FMI administration rules.

    View the consultation page.

    View the draft rules.

    View the draft commencement order.