New regulatory powers Digital settlement assets Special Administration Regimes
The Act gives HM Treasury powers to amend insolvency and administration procedures as they apply to the operators of recognised (under Part 5 of the Banking Act 2009) payment systems and recognised service providers that use digital settlement. This will allow HM Treasury to amend existing Special Administration Regimes (SARs) by way of secondary legislation, as they apply to such firms, to prepare for their possible failure. SARs provide for bespoke insolvency provision where the general administration process is not considered to be in the public interest. The Financial Market Infrastructure (FMI) SAR (provided for in Part 6 of FSBRA 2013 imposes an objective on administrators to ensure that a failed payment system in scope of the regime continues to be maintained and operated as an efficient and effective system, effectively prioritising this ahead of the interests of its creditors. Initially, HM Treasury intends to develop and bring forward a statutory instrument to amend the FMI SAR to ensure it can effectively be applied to digital settlement.