Part 1: Regulatory Framework Financial market infrastructure: general rules and requirements Section 9: Rules relating to central counterparties and central securities depositories
This section inserts new sections 300F and 300G into FSMA 2000, which will create a general rule-making power for the Bank over recognised central counterparties, recognised CSDs, third country central counterparties and third country CSDs. The terms "recognised central counterparty", "recognised CSD", "third country central counterparty" and "third country CSD" have the meaning provided for in section 285 of FSMA 2000. This section will enable the Bank to set rules for these firms that it judges are necessary or expedient to advance its Financial Stability Objective.
	New section 300G places restrictions on how this general rule-making power will apply to third country CCPs and CSDs. It ensures that the Bank can only apply "corresponding" rules to these firms. This means that the Bank can only apply rules which have already been applied to the relevant domestic firm (for example, in the case of third country CCPs, this would be recognised CCPs). The Bank would be able to apply all corresponding rules to the third country CCP or CSD or only such rules as it considers appropriate.
	Subsection (3) of new section 300G allows the Bank to modify the rules to ensure that they can be applied effectively to overseas firms, reflecting their different circumstances. This is intended to account for the fact that domestic rules may have been drafted with the specific legal or operational circumstances of UK CCPs in mind. For example, rules may make reference to UK-law concepts or definitions, or they may be tailored to fit the corporate structure of UK firms. As such, the Bank may need to modify the rules to ensure they operate effectively for overseas firms.
	New section 300G also makes different provision for "systemic third country CCPs" compared to other CCPs and CSDs. "Systemic third country CCPs" are third country CCPs the Bank has determined are systemically important, or are likely to become systemically important, to the financial stability of the United Kingdom. When making this determination, the Bank must have regard to criteria of general application set out by HM Treasury through secondary legislation. It must also have regard to any statement of policy issued by the Bank which provide further specification of the criteria set out by HM Treasury.
	Where a third country CCP is a systemic third country CCP, the Bank will automatically be able to apply rules to that firm which correspond to those for recognised CCPs. For other CCPs and CSDs, the Bank may only apply its rules to third country firms if HM Treasury makes regulations authorising it to do so (new section 300G (1)(b)). When making these regulations, HM Treasury, under subsections (4) and (5) of the new 300G, would be able to limit which firms any such Bank power would apply to, and to impose further conditions or limitations on how any power could be used. These restrictions do not apply to the Bank’s power to apply corresponding rules to systemic third country CCPs.
	New section 300G(14) allows HM Treasury to make regulations applying other provisions of FSMA 2000 with modifications to third country CCPs and third country CSDs. These are the overseas firms that the Bank will be able to apply its rules to, subject to the limitations set out in s.300G. This power is needed in order to ensure that provisions of FSMA 2000 - for example, regarding enforcement - apply to these firms, as is appropriate in light of the rules that the Bank is able to make. Schedule 17A already makes some provision for application of provisions in FSMA 2000.
	Subsection (5) of section 9 amends the Bank’s power at section 293 of FSMA 2000 to make rules requiring recognised bodies to notify it of specified events, or provide it with specified information. This amendment will enable the Bank to make rules under section 293 concerning third country central counterparties.