PART 1 Introductory provision and application

Citation, commencement and extent

1. —(1) These Rules may be cited as the Financial Market Infrastructure Administration (England and Wales) Rules 2018, and come into force on 4th August 2018.

(2) These Rules extend to England and Wales only, and apply in relation to infrastructure companies which the courts of England and Wales have jurisdiction to wind up.

Interpretation

2. —(1) In these Rules—

“the 1986 Act” means the Insolvency Act 1986;

“the 2000 Act” means the Financial Services and Markets Act 2000( 4 );

“the 2013 Act” means the Financial Services (Banking Reform) Act 2013;

“the Bank” means the Bank of England;

“business day” means any day other than a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday in England and Wales;

“the court”, except in the reference to the County Court in rule 12(3)(l), means the High Court;

“designated service provider” means a company designated under section 112(4) of the 2013 Act;

“the FCA” means the Financial Conduct Authority;

“FMI administration” means the procedure for which provision is made by Part 6 of the 2013 Act( 5 ) (special administration for operators of certain infrastructure systems);

“FMI administration application” means an application by the Bank for an FMI administration order in respect of an infrastructure company;

“the Insolvency Rules” means the Insolvency (England and Wales) Rules 2016( 6 );

“operator of a securities settlement system” means a company which, in relation to the securities settlement system concerned, is an infrastructure company by virtue of falling within section 112(2)(b) of the 2013 Act( 7 );

“Payment Systems Regulator” means the body established under section 40 of the 2013 Act;

“personal service” is a reference to personal service in accordance with Part 6 of the Civil Procedure Rules 1998( 8 );

“the PRA” means the Prudential Regulation Authority;

“PRA-authorised person” has the meaning given by section 2B(5)( 9 ) of the 2000 Act; and

“Schedule B1” means Schedule B1 to the 1986 Act( 10 ).

(2) In these Rules the following expressions have the same meaning as in Part 6 of the 2013 Act( 11 )—

(a) “FMI administration order”;

(b) “FMI administrator”;

(c) “infrastructure company”;

(d) “operator”, in relation to a recognised payment system( 12 );

(e) “recognised payment system”; and

(f) “securities settlement system”.

(3) In these Rules the following expressions have the meaning given in rule 1(2) of the Insolvency Rules—

(a) “Article 1.2 undertaking”;

(b) “deliver” and “deliver to the creditors”;

(c) “enforcement agent”;

(d) “file with the court”;

(e) “IP number”;

(f) “main proceedings”;

(g) “non-EC proceedings”;

(h) “secondary proceedings”

(i) “territorial proceedings”

(j) “venue”; and

(k) “witness statement”.

PART 2 Application for an FMI Administration Order

Contents of application for an FMI administration order

3. —(1) An FMI administration application by the Bank of England must be headed “FMI administration application” and immediately below the heading must—

(a) identify the infrastructure company to which it relates; and

(b) indicate whether the infrastructure company is—

(i) the operator of a recognised payment system;

(ii) the operator of a securities settlement system; or

(iii) a designated service provider which provides services to an operator falling within paragraph (i) or (ii).

(2) The FMI administration application must contain—

(a) the full name and any trading name of the infrastructure company;

(b) the address of the infrastructure company’s registered office;

(c) any address for service of which the infrastructure company has notified the Bank;

(d) an email address for the infrastructure company;

(e) if the company is registered under the Companies Act 2006( 13 ), a statement—

(i) specifying any issued and called-up share capital, the number of shares into which the capital is divided, the nominal value of each share and the amount of capital paid up or treated as paid up; or

(ii) that the infrastructure company is a company limited by guarantee;

(f) particulars of the principal business carried on by the infrastructure company;

(g) a statement whether the infrastructure company is an Article 1.2 undertaking;

(h) a statement whether the FMI administration will be main, secondary, territorial or non-EC proceedings, and that the reasons for the statement are set out in the witness statement in support of the application made under rule 5;

(i) a statement either—

(i) that for the reasons set out in the witness statement the Bank believes that the infrastructure company is, or is likely to be, unable to pay its debts; or

(ii) that on a petition presented by the Secretary of State under section 124A of the 1986 Act( 14 ) (petition for winding up on grounds of public interest), it would be just and equitable (disregarding the objective of the FMI administration) to wind up the infrastructure company;

(j) the name and address of the person (or persons) nominated for appointment as FMI administrator;

(k) the address for service of the Bank; and

(l) a statement that the Bank requests the court—

(i) to make an FMI administration order;

(ii) to appoint as the FMI administrator the person (or persons) nominated for appointment;

(iii) to make such ancillary order as the Bank may request and such other order as the court thinks appropriate.

(3) The application must be authenticated by the Bank or the Bank’s solicitor and dated.

Statement of proposed FMI administrator

4. —(1) An FMI administration application must be accompanied by a statement by the person nominated for appointment as FMI administrator which contains—

(a) identification details of the infrastructure company;

(b) the person’s name and address;

(c) particulars of the person’s qualification to act as FMI administrator( 15 );

(d) the person’s IP number;

(e) the name of the recognised professional body (within the meaning given in section 391 of the 1986 Act( 16 )) which is the source of the person’s authorisation;

(f) a statement that the person consents to act as FMI administrator;

(g) a statement whether or not the person has had any prior professional relationship with the infrastructure company, and if so, a short summary of that relationship; and

(h) a statement that the person is of the opinion that the objective of FMI administration set out in section 115 of the 2013 Act is reasonably likely to be achieved by one or both of the means specified in section 115.

(2) The statement must be authenticated and dated by the proposed FMI administrator.

(3) Where the Bank proposes the appointment of two or more persons to act jointly or concurrently as the FMI administrator, each one must make a separate statement.

Bank of England witness statement

5. —(1) An FMI administration application must be accompanied by a witness statement made by or on behalf of the Bank which contains—

(a) a statement of the infrastructure company’s financial position (to the best of the Bank’s knowledge and belief), specifying its assets and liabilities, including contingent and prospective liabilities, and including—

(i) where the Bank makes a statement under rule 3(2)(i)(i), a statement of the reasons why the Bank believes that the infrastructure company is, or is likely to become, unable to pay its debts;

(ii) where the Bank makes a statement under rule 3(2)(i)(ii), a statement that the Secretary of State has certified, or is to certify, to the court the matter referred to in section 117(2) of the 2013 Act;

(b) details of any security which the Bank knows or believes to be held by a creditor of the infrastructure company;

(c) a statement whether any security confers power to appoint an administrative receiver or an administrator under paragraph 14 of Schedule B1 (holder of qualifying floating charge);

(d) a statement that an administrative receiver has been appointed, if that is the case;

(e) a statement whether the Bank has received notice under section 122(1)(a) or (2)(b), 123(3)(a) or 124(a) of the 2013 Act, exhibiting a copy of the notice, if there is one;

(f) details of any other insolvency proceedings in relation to the infrastructure company;

(g) details of any FMI transfer scheme (within the meaning given by paragraph 4(1) of Schedule 7 to the 2013 Act) which the Bank intends to approve;

(h) if more than one person is nominated for appointment as FMI administrator, a statement of the matters relating to the exercise of their functions set out in paragraph 100(2) of Schedule B1 (joint or concurrent exercise of functions);

(i) the reasons for the statement that the FMI administration proceedings will be main, secondary, territorial or non-EC proceedings; and

(j) particulars of any other matter which the Bank considers may help the court to decide whether to make the FMI administration order.

(2) Where the infrastructure company is a designated service provider, the witness statement must identify the recognised payment system or securities settlement system (or, if there is more than one such system, each one) in relation to which the infrastructure company provides services.

(3) The witness statement must—

(a) identify the person who makes the statement;

(b) state the capacity in which that person makes the statement; and

(c) state the basis for that person’s knowledge of, or belief in, the matters set out in the statement.

Filing of application with the court and venue for hearing

6. —(1) An FMI administration application must be filed with the court together with the witness statement and the statement of the proposed FMI administrator (“accompanying documents”).

(2) The court must fix a venue for the hearing of the FMI administration application.

(3) In fixing the venue the court must have regard to—

(a) the desirability of the application being heard as soon as is reasonably practicable; and

(b) the need to give the representatives of the infrastructure company a reasonable opportunity to attend the hearing.

(4) There must also be filed with the court, at the same time as the FMI administration application or at any time after that, a sufficient number of copies of the application and accompanying documents for service under rule 7.

(5) Each filed copy of the FMI administration application must—

(a) have applied to it the seal of the court;

(b) be endorsed with—

(i) the date and time of filing; and

(ii) the venue for the hearing of the FMI administration application; and

(c) be issued to the Bank for service under rule 7.

Service of FMI administration application

7. —(1) The Bank must serve a sealed and endorsed copy of the FMI administration application and accompanying documents—

(a) on the infrastructure company;

(b) where the infrastructure company is a designated service provider, on the operator of the recognised payment system or securities settlement system (or, if there is more than one system or operator, on each such system or operator) in relation to which the infrastructure company provides services;

(c) on each person nominated for appointment as FMI administrator;

(d) on any person who, to the knowledge of the Bank, is entitled to appoint an administrative receiver or an administrator under paragraph 14 of Schedule B1; and

(e) on any person who has given the Bank notice under section 122(1)(a) or (2)(b), 123(3)(a) or 124(a) of the 2013 Act.

(2) The service of documents under paragraph (1) must be effected as soon as is reasonably practicable, having regard, in particular, to the need to give representatives of the infrastructure company a reasonable opportunity to attend the hearing.

(3) The service of documents on a person under paragraph (1) must be effected—

(a) by personal service at an address that the person has notified to the Bank as an address for service;

(b) where the person has not notified an address for service, by personal service at the person’s registered office;

(c) where the person has not notified an address for service and has no registered office, by personal service at the person’s usual or last known principal place of business in England and Wales; or

(d) in such other manner and at such other place as the court may direct.

(4) If the Bank knows of an email address that is habitually used for business purposes by a person on whom documents are required by this rule to be served, the Bank must as soon as is reasonably practicable (in addition to personal service) send by email an electronic copy of a sealed and endorsed copy of the FMI administration application issued for service under rule 6 and of the accompanying documents.

(5) The service of the FMI administration application and accompanying documents must be verified by a certificate of service which—

(a) identifies the application and the infrastructure company;

(b) identifies the accompanying documents by reference to the date on which each statement was made and the person who made it;

(c) specifies—

(i) the date of the application;

(ii) the court in which the application was made and the court reference number;

(iii) whether the copy of the application served was a sealed copy;

(iv) the person served;

(v) the manner of service and the date of service; and

(d) is verified by a statement of truth made in accordance with Part 22 of the Civil Procedure Rules 1998( 17 ).

(6) The certificate of service, together with a copy of the documents served, must be filed with the court as soon as is reasonably practicable before the hearing of the FMI administration application.

Notice of filing of FMI administration application

8. —(1) As soon as is reasonably practicable after filing an FMI administration application, the Bank must deliver a notice that the application has been made—

(a) to the FCA;

(b) where the infrastructure company is a PRA-authorised person, to the PRA;

(c) to any enforcement agent or other officer who, to the knowledge of the Bank, is charged with distress or other legal process against the infrastructure company or its property;

(d) to any person who, to the knowledge of the Bank, has distrained against the infrastructure company or its property; and

(e) where the infrastructure company is the operator of a recognised payment system, or a designated service provider which provides services to such an operator, to the Payment Systems Regulator.

(2) In paragraph (1) “distress” and “property” have the meaning given in section 436(1) of the 1986 Act.

Hearing of FMI administration application

9. —(1) At the hearing of an FMI administration application, any of the following may appear or be represented—

(a) the Bank;

(b) the Treasury;

(c) the FCA;

(d) where the infrastructure company is a PRA-authorised person, the PRA;

(e) where the infrastructure company is the operator of a recognised payment system, or a designated service provider which provides services to such an operator, the Payment Systems Regulator;

(f) the infrastructure company;

(g) a director of the infrastructure company;

(h) the person (or a person) nominated for appointment as FMI administrator;

(i) any person who has given notice in respect of the infrastructure company under section 122(1)(a) or (2)(b), 123(3)(a) or 124(a) of the 2013 Act; and

(j) with the permission of the court, any other person who appears to have an interest in the FMI administration application which justifies appearance.

(2) If the court makes an FMI administration order, the following are payable as an expense of the FMI administration—

(a) the Bank’s costs of making the application; and

(b) any other costs, whether incurred by the Bank or by any other person, which are allowed by the court.

The FMI administration order

10. —(1) Where the court makes an FMI administration order, the court’s order must be headed “FMI administration order” and must contain the following—

(a) the name of the court in which the order is made;

(b) the name and title of the judge making the order;

(c) identification details for the infrastructure company;

(d) the address for service of the Bank (as the applicant);

(e) details of any other parties (including the infrastructure company) appearing and of persons by whom those parties are represented;

(f) an order that while the order is in force the affairs, business and property of the infrastructure company are to be managed by the FMI administrator;

(g) the name of the person appointed as the FMI administrator and that person’s IP number;

(h) an order that that person is appointed as FMI administrator of the infrastructure company;

(i) the date of the order (and, if the court so orders, the time);

(j) a statement that the court is satisfied either that the Council Regulation insolvency proceedings( 18 ) does not apply or that it does;

(k) where that Council Regulation does apply, a statement whether the FMI administration proceedings are main, secondary or territorial proceedings; and

(l) such other provisions as the court thinks just.

(2) Where two or more FMI administrators are appointed, the order must also specify (as required by paragraph 100(2) of Schedule B1)—

(a) which functions, if any, are to be exercised by those persons acting jointly; and

(b) which functions, if any, are to be exercised by any or all of those persons.

Notice of FMI administration order

11. —(1) If the court makes an FMI administration order, it must as soon as is reasonably practicable deliver to the Bank—

(a) four sealed copies of the order if the infrastructure company is the operator of a securities settlement system or a designated service provider which provides services to such an operator;

(b) five sealed copies of the order if the infrastructure company is the operator of a recognised payment system or a designated service provider which provides services to such an operator.

(2) The Bank must as soon as is reasonably practicable deliver a sealed copy of the order—

(a) to the infrastructure company;

(b) to the FMI administrator;

(c) to the FCA;

(d) where the infrastructure company is a PRA-authorised person, to the PRA; and

(e) where the infrastructure company is the operator of a recognised payment system, or a designated service provider which provides services to such an operator, to the Payment Systems Regulator.

PART 3 Application of the Insolvency Rules

Application of the Insolvency Rules

12. —(1) The provisions of the Insolvency Rules listed in the table in paragraph (4) apply for the purposes of FMI administration and FMI administration applications.

(2) The applied provisions of the Insolvency Rules have effect for that purpose—

(a) with any specific modifications set out in the table in paragraph (4);

(b) unless the context otherwise requires and subject to any specific modification, with the general modifications set out in paragraph (3); and

(c) with any other necessary modifications.

(3) The general modifications are that—

(a) a reference to an administrator is a reference to the FMI administrator;

(b) a reference to administration is a reference to FMI administration;

(c) a reference to an administration application is a reference to an FMI administration application;

(d) a reference to an administration order is a reference to an FMI administration order;

(e) a reference to the court is a reference to the High Court;

(f) except in Part 3 of the Insolvency Rules, a reference to insolvency proceedings is a reference to proceedings commenced by an FMI administration application;

(g) a reference to proceedings under the 1986 Act (or under any Part or provision of that Act) includes a reference to proceedings commenced by an FMI administration application;

(h) a reference to an insolvency practitioner is a reference to the FMI administrator;

(i) a reference to the company is a reference to the infrastructure company;

(j) a reference to the Insolvency Rules, or to a numbered rule of the Insolvency Rules, is a reference to the Insolvency Rules, or to the numbered rule, as applied (with any modification) by this rule;

(k) a reference to the 1986 Act, a numbered section of that Act or a numbered paragraph of Schedule B1 is a reference to that Act, that section or that paragraph as applied (with any modification) by Part 6 of the 2013 Act; and

(l) all references to the Official Receiver, the County Court and the provisional liquidator are to be ignored.

(4) This paragraph contains the table of applied provisions of the Insolvency Rules.

PART 4 Review of the Rules

Review

13. —(1) The Lord Chancellor must from time to time—

(a) carry out a review of the regulatory provision contained in these Rules; and

(b) publish a report setting out the conclusions of the review.

(2) The first report must be published before the end of the period of five years beginning with the date on which these Rules come into force for any purpose.

(3) Subsequent reports must be published at intervals not exceeding five years.

(4)Section 30(4) of the Small Business, Enterprise and Employment Act 2015 requires that a review carried out under these Rules must in particular—

(a) set out the objectives intended to be achieved by the regulatory provision in these Rules;

(b) assess the extent to which those objectives are achieved;

(c) assess whether those objectives remain appropriate; and

(d) if those objectives remain appropriate, assess the extent to which they could be achieved in another way which involves less onerous regulatory provision.

(5) In this rule, “regulatory provision” has the same meaning as in sections 28 to 32 of the Small Business, Enterprise and Employment Act 2015 (see section 32 of that Act).