On 15 August 2019, the Financial Markets Law Committee (FMLC) published a letter that it had sent to HM Treasury on the Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (the Regulations).

The Regulations implemented the European Markets Infrastructure Regulation (EMIR) in the UK. HM Treasury’s review may propose changes to Part VII of the Companies Act 1989.

In 2016, the FMLC undertook research on issues of legal complexity arising in the context of proprietary claims to collateral under Part VII of the Companies Act 1989, culminating in the publication of a report. The report drew attention to issues of legal uncertainty in the default management processes of a central counterparty, which were designed to meet certain regulatory objectives and requirements, including the reduction of systemic risk and the implementation of safeguards for (non-defaulting) clients.

In its letter, the FMLC urges HM Treasury to take the matters raised in the report into account in the conduct of its review of the Regulations.