On 10 July 2018, HM Treasury published a response to its November 2016 consultation, Rules on ensuring the effective functioning of the financial market infrastructure special administration regime, setting out the Government’s proposals for the rules that will underpin the procedural aspects of the special resolution regime for financial markets infrastructure (FMI).

In particular the Government made a number of key proposals in its consultation including rules to:

  • specify that an application for an FMI administration order must include a witness statement made by or on behalf of the Bank of England;
  • provide for notification and copies of key documents and decisions to be sent to the FCA, and where relevant to the PRA and the Payment Systems Regulator (PSR);
  • allow the FCA, HM Treasury and, where relevant, the PRA and the PSR the right to appear and make representations at a court hearing of an FMI administration application;
  • allow the Bank of England to set the remuneration of the FMI administrator; and
  • allow the Bank of England to decide if pre-administration costs can be paid to the FMI administrator.

In its response the Government agrees with respondent feedback that system operators should be made aware when their service provider is being put into administration. Changes have now been made to the final rules so that where the infrastructure company is a designated service provider, the operator of the recognised payment system or securities settlement system will be notified of the application for administration. Also, the FMI administrator will serve a notice of their appointment to the system operator(s) where the infrastructure company is a designated service provider. The notice will inform the system operator(s) that the FMI administrator has been appointed and the date of the appointment.

In terms of next steps the FMI administration rules will be shortly laid before Parliament and will come into force 21 days after laying.