Payment and Settlement Systems (Finality and Netting) Act · 2022 Revised Edition · Part · Transactions Effected Through Designated System
8. Proceedings of designated system takes precedence over law of insolvency
Official textFrom Attorney General's Chambers, unchanged
None of the following are to be regarded as to any extent invalid on the ground of inconsistency with the law for distribution of the assets of a person on bankruptcy or winding up, or on the appointment of a receiver, receiver and manager or an equivalent officer over any of the assets of a person —
a transfer order;
any disposition of property in pursuance of such an order;
the default arrangements of a designated system; or
the rules of a designated system as to the settlement of transfer orders not dealt with under its default arrangements.
The powers of a relevant office holder and the powers of a court under the law of insolvency shall not be exercised in such a way as to prevent or interfere with —
relevant office holder
“relevant office holder” means — (a) the Official Receiver exercising his powers under the Bankruptcy Act; (b) a person acting in relation to a company as its liquidator, receiver, receiver and manager, judicial manager or an equivalent officer; or (c) a person acting in relation to an individual as his trustee in bankruptcy or interim receiver of his property or an equivalent officer;
the settlement of a transfer order in accordance with the rules of a designated system not dealt with under its default arrangements; or
any action taken under its default arrangements.
A debt or other liability arising out of a transfer order which is the subject of an action taken under default arrangements may not be proved in a bankruptcy or winding up until the completion of the action taken under default arrangements.
transfer order
“transfer order” means — (a) an instruction by a participant to place at the disposal of a recipient an amount of money by means of a book-entry on the accounts of a settlement institution for a designated system, or an instruction which, when settled, results in the assumption or discharge of a payment obligation as defined by the rules of a designated system; or (b) an instruction by a participant either to settle an obligation for the transfer of book-entry securities, or for the transfer of such securities.
A debt or other liability which by virtue of subsection (3) may not be proved shall not be taken into account for the purposes of any set-off until the completion of the action taken under default arrangements.
default arrangements
“default arrangements” means the arrangements put in place by a designated system to limit systemic and other types of risk which arise in the event of a participant appearing to be unable, or likely to become unable, to meet its obligations in respect of a transfer order, including any arrangements for — (a) netting; or (b) the closing out of open positions;
Terms defined in s 2
default arrangements
Defined · s 2“default arrangements” means the arrangements put in place by a designated system to limit systemic and other types of risk which arise in the event of a participant appearing to be unable, or likely to become unable, to meet its obligations in respect of a transfer order, including any arrangements for — (a) netting; or (b) the closing out of open positions;
designated system
Defined · s 2“designated system” means a system that is designated by the Authority under section 3 to be a designated system for the purposes of this Act;
disposition of property
Defined · s 2“disposition of property” includes a payment made into or out of an account of a participant;
relevant office holder
Defined · s 2“relevant office holder” means — (a) the Official Receiver exercising his powers under the Bankruptcy Act; (b) a person acting in relation to a company as its liquidator, receiver, receiver and manager, judicial manager or an equivalent officer; or (c) a person acting in relation to an individual as his trustee in bankruptcy or interim receiver of his property or an equivalent officer;
transfer order
Defined · s 2“transfer order” means — (a) an instruction by a participant to place at the disposal of a recipient an amount of money by means of a book-entry on the accounts of a settlement institution for a designated system, or an instruction which, when settled, results in the assumption or discharge of a payment obligation as defined by the rules of a designated system; or (b) an instruction by a participant either to settle an obligation for the transfer of book-entry securities, or for the transfer of such securities.
Part
Netting
Part