(a) in favour of a recognised investment exchange, for the purpose of securing debts or liabilities arising in connection with the settlement of market contracts,

 (b) in favour of a recognised clearing house, for the purpose of securing debts or liabilities arising in connection with their ensuring the performance of market contracts, or

 (c) in favour of a person who agrees to make payments as a result of the transfer of specified securities made through the medium of a computer-based system established by the Bank of England and The Stock Exchange, for the purpose of securing debts or liabilities of the transferee arising in connection therewith.

    (3) In subsection (1)(c)

"specified securities" means securities for the time being specified in the list in Schedule 1 to the [1982 c. 41.] Stock Transfer Act 1982, and includes any right to such securities; and

"transfer", in relation to any such securities or right, means a transfer of the beneficial interest.

    (5) The regulations may provide that a charge shall or shall not be treated as a market charge if or to the extent that it secures obligations of a specified description, is a charge over property of a specified description or contains provisions of a specified description.

    (6) Before making regulations under this section in relation to charges granted in favour of a person within subsection (1)(c), the Secretary of State shall consult the Treasury and the Bank of England.

    (2) The Secretary of State may by regulations make further provision modifying the law of insolvency in relation to the matters mentioned in subsection (1).

    (3) The regulations may add to, amend or repeal the provisions mentioned in subsection (1), and any other provision of this Part as it applies for the purposes of those provisions, or provide that those provisions have effect with such exceptions, additions or adaptations as are specified in the regulations.

    (4) The regulations may make different provision for cases defined by reference to the nature of the charge, the nature of the property subject to it, the circumstances, nature or extent of the obligations secured by it or any other relevant factor.

    (5) Before making regulations under this section in relation to charges granted in favour of a person within section 173(1)(c), the Secretary of State shall consult the Treasury and the Bank of England.

 (a) sections 10(1)(b) and 11(3)(c) (restriction on enforcement of security while petition for administration order pending or order in force), and

 (b) section 15(1) and (2) (power of administrator to deal with charged property);

    (2) However, where a market charge falls to be enforced after an administration order has been made or a petition for an administration order has been presented, and there exists another charge over some or all of the same property ranking in priority to or pari passu with the market charge, the court may order that there shall be taken after enforcement of the market charge such steps as the court may direct for the purpose of ensuring that the chargee under the other charge is not prejudiced by the enforcement of the market charge.

    (3) The following provisions of the Insolvency Act 1986 (which relate to the powers of receivers) do not apply in relation to a market charge

 (a) section 43 (power of administrative receiver to dispose of charged property), and

 (b) section 61 (power of receiver in Scotland to dispose of an interest in property).

    (5) However, if a person (other than the chargee under the market charge) who is party to a disposition mentioned in subsection (4) has notice at the time of the disposition that a petition has been presented for the winding up or bankruptcy or sequestration of the estate of the party making the disposition, the value of any profit to him arising from the disposition is recoverable from him by the relevant office-holder unless the court directs otherwise.

    (6) Any sum recoverable by virtue of subsection (5) ranks for priority, in the event of the insolvency of the person from whom it is due, immediately before preferential or, in Scotland, preferred debts.

    (7) In a case falling within both subsection (4) above (as a disposition of property as a result of which the property becomes subject to a market charge) and section 164(3) (as the provision of margin in relation to a market contract), section 164(4) applies with respect to the recovery of the amount or value of the margin and subsection (5) above does not apply.

    (2) The regulations may specify any description of charge granted in favour of

 (a) a body approved under section 170 (certain overseas exchanges and clearing houses),

 (b) a person included in the list maintained by the Bank of England for the purposes of section 171 (certain money market institutions),

 (c) the Bank of England,

 (d) an authorised person within the meaning of the [1986 c. 60.] Financial Services Act 1986, or

 (e) an international securities self-regulating organisation within the meaning of that Act,

    (3) The regulations may specify any description of charge granted for that purpose in favour of any other person in connection with exchange facilities or clearing services provided by a recognised investment exchange or recognised clearing house or by any such body, person, authority or organisation as is mentioned in subsection (2).

    (4) Where a charge is granted partly for the purpose specified in subsection (2) and partly for other purposes, the power conferred by this section is exercisable in relation to the charge so far as it has effect for that purpose.

    (5) The regulations may

 (a) make the same or similar provision in relation to the charges to which they apply as is made by or under sections 174 and 175 in relation to market charges, or

 (b) apply any of those provisions with such exceptions, additions or adaptations as are specified in the regulations.

 (a) in favour of a person included in the list maintained by the Bank of England for the purposes of section 171, or in connection with exchange facilities or clearing services provided by a person included in that list, or

 (b) in favour of the Bank of England, or in connection with settlement arrangements provided by the Bank,

    (7) Regulations under this section may provide that they apply or do not apply to a charge if or to the extent that it secures obligations of a specified description, is a charge over property of a specified description or contains provisions of a specified description.

    (2) So far as necessary to enable the property to be applied in accordance with the rules of the exchange or clearing house, it may be so applied notwithstanding any prior equitable interest or right, or any right or remedy arising from a breach of fiduciary duty, unless the exchange or clearing house had notice of the interest, right or breach of duty at the time the property was provided as margin.

    (3) No right or remedy arising subsequently to the property being provided as margin may be enforced so as to prevent or interfere with the application of the property by the exchange or clearing house in accordance with its rules.

    (4) Where an exchange or clearing house has power by virtue of the above provisions to apply property notwithstanding an interest, right or remedy, a person to whom the exchange or clearing house disposes of the property in accordance with its rules takes free from that interest, right or remedy.

    (2) The regulations may make different provision for cases defined, as regards the market charge or the subsequent charge, by reference to the description of charge, its terms, the circumstances in which it is created or arises, the nature of the charge, the person in favour of whom it is granted or arises or any other relevant factor.

 (a) in the case of property provided as cover for margin, the investment exchange or clearing house in question, or

 (b) in the case of property subject to a market charge, the person in whose favour the charge was granted.

    (3) Where by virtue of this section a person would not be entitled to enforce a judgment or order against any property, any injunction or other remedy granted with a view to facilitating the enforcement of any such judgment or order shall not extend to that property.

    (4) In the application of this section to Scotland, the reference to execution being commenced or continued includes a reference to diligence being carried out or continued, and the reference to distress being levied shall be omitted.

 (a) section 170, 171 or 172 (power to extend provisions relating to market contracts), or

 (b) section 176 (power to extend provisions relating to market charges),

    (2) The regulations may provide that those sections apply with such exceptions, additions and adaptations as may be specified in the regulations.

 (a) a member of a recognised investment exchange or a recognised clearing house, or

 (b) a person by whom a market charge has been granted,

That person is referred to in this section as "the relevant person" .

    (2) For the purposes of this section "insolvency proceedings" means proceedings under Part II, IV, V or IX of the [1986 c. 45.] Insolvency Act 1986 (administration, winding up and bankruptcy) or under the [1985 c. 66.] Bankruptcy (Scotland) Act 1985; and references in this section to the beginning of such proceedings are to

 (a) the presentation of a petition on which an administration order, winding-up order, bankruptcy order or award of sequestration is made, or

 (b) the passing of a resolution for voluntary winding up.

 (a) in England and Wales, the administration of the insolvent estate of a deceased person, and

 (b) in Scotland, the administration by a judicial factor appointed under section 11A of the [1889 c. 39.] Judicial Factors (Scotland) Act 1889 of the insolvent estate of a deceased person,

In such a case references to the beginning of the proceedings shall be construed as references to the death of the relevant person.

    (4) The court may on an application made, within three months after the commencement of this section, by

 (a) a recognised investment exchange or recognised clearing house, or

 (b) a person in whose favour a market charge has been granted,

    (5) The provisions of that Schedule ("the relevant provisions") reproduce the effect of certain provisions of this Part as they appeared in the Bill for this Act as introduced into the House of Lords and published on that date.

    (6) The court may in particular

 (a) require the relevant person or a relevant office-holder
 (i) to return property provided as cover for margin or which was subject to a market charge, or to pay to the applicant or any other person the proceeds of realisation of such property, or
 (ii) to pay to the applicant or any other person such amount as the court estimates would have been payable to that person if the relevant provisions had come into force on 22nd December 1988 and market contracts had been settled in accordance with the rules of the recognised investment exchange or recognised clearing house, or a proportion of that amount if the property of the relevant person or relevant office-holder is not sufficient to meet the amount in full;

 (b) provide that contracts, rules and dispositions shall be treated as not having been void;

 (c) modify the functions of a relevant office-holder, or the duties of the applicant or any other person, in relation to the insolvency proceedings, or indemnify any such person in respect of acts or omissions which would have been proper if the relevant provisions had been in force;

 (d) provide that conduct which constituted an offence be treated as not having done so;

 (e) dismiss proceedings which could not have been brought if the relevant provisions had come into force on 22nd December 1988, and reverse the effect of any order of a court which could not, or would not, have been made if those provisions had come into force on that date.

    (2) A court shall not, in pursuance of that section or any other enactment or rule of law, recognise or give effect to

 (a) any order of a court exercising jurisdiction in relation to insolvency law in a country or territory outside the United Kingdom, or

 (b) any act of a person appointed in such a country or territory to discharge any functions under insolvency law,

    (3) Subsection (2) does not affect the recognition or enforcement of a judgment required to be recognised or enforced under or by virtue of the [1982 c. 27.] Civil Jurisdiction and Judgments Act 1982.

    (2) Any failure by a recognised investment exchange or recognised clearing house to comply with its own rules in respect of any matter shall not prevent that matter being treated for the purposes of this Part as done in accordance with those rules so long as the failure does not substantially affect the rights of any person entitled to require compliance with the rules.

    (3) No recognised investment exchange or recognised clearing house, nor any officer or servant or member of the governing body of a recognised investment exchange or recognised clearing house, shall be liable in damages for anything done or omitted in the discharge or purported discharge of any functions to which this subsection applies unless the act or omission is shown to have been in bad faith.

    (4) The functions to which subsection (3) applies are the functions of the exchange or clearing house so far as relating to, or to matters arising out of

 (a) its default rules, or

 (b) any obligations to which it is subject by virtue of this Part.

    (2) Provision may, in particular, be made

 (a) for integrating the provisions of this Part with the general law of insolvency, and

 (b) for adapting the provisions of this Part in their application to overseas investment exchanges and clearing houses.

    (2) Regulations under this Part shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

    (2) References in this Part to a market contract to which a person is a party include (subject as follows, and unless the context otherwise requires) contracts to which he is party as agent.

    (3) The Secretary of State may by regulations

 (a) modify or exclude the operation of subsections (1) and (2), and

 (b) make provision as to the circumstances in which a person is to be regarded for the purposes of those provisions as acting in different capacities.

    (2) References in this Part to a "defaulter" are to a person in respect of whom action has been taken by a recognised investment exchange or recognised clearing house under its default rules, whether by declaring him to be a defaulter or otherwise; and references in this Part to "default" shall be construed accordingly.

    (3) In this Part "default proceedings" means proceedings taken by a recognised investment exchange or recognised clearing house under its default rules.

    (4) If an exchange or clearing house takes action under its default rules in respect of a person, all subsequent proceedings under its rules for the purposes of or in connection with the settlement of market contracts to which the defaulter is a party shall be treated as done under its default rules.

 (a) the official receiver,

 (b) any person acting in relation to a company as its liquidator, provisional liquidator, administrator or administrative receiver,

 (c) any person acting in relation to an individual (or, in Scotland, any debtor within the meaning of the [1985 c. 66.] Bankruptcy (Scotland) Act 1985) as his trustee in bankruptcy or interim receiver of his property or as permanent or interim trustee in the sequestration of his estate,

 (d) any person acting as administrator of an insolvent estate of a deceased person.

"administrative receiver" has the meaning given by section 251 of the Insolvency Act 1986;

"charge" means any form of security, including a mortgage and, in Scotland, a heritable security;

"clearing house" has the same meaning as in the [1986 c. 60.] Financial Services Act 1986;

"interim trustee" and "permanent trustee" have the same meaning as in the Bankruptcy (Scotland) Act 1985;

"investment" and "investment exchange" have the same meaning as in the Financial Services Act 1986;

"overseas", in relation to an investment exchange or clearing house, means having its head office outside the United Kingdom;

"recognised" means recognised under the Financial Services Act 1986;

"set-off", in relation to Scotland, includes compensation;

"The Stock Exchange" means The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited;

"UK", in relation to an investment exchange or clearing house, means having its head office in the United Kingdom.

    (3) In this Part the expressions "margin" and "cover for margin" have the same meaning.

    (4) References in this Part to ensuring the performance of a transaction have the same meaning as in the [1986 c. 60.] Financial Services Act 1986.

    (5) For the purposes of this Part a person shall be taken to have notice of a matter if he deliberately failed to make enquiries as to that matter in circumstances in which a reasonable and honest person would have done so.

This does not apply for the purposes of a provision requiring "actual notice".

    (6) References in this Part to the law of insolvency include references to every provision made by or under the [1986 c. 45.] Insolvency Act 1986 or the [1985 c. 66.] Bankruptcy (Scotland) Act 1985; and in relation to a building society references to insolvency law or to any provision of the Insolvency Act 1986 are to that law or provision as modified by the Building Societies Act 1986.

    (7) In relation to Scotland, references in this Part

 (a) to sequestration include references to the administration by a judicial factor of the insolvent estate of a deceased person, and

 (b) to an interim or permanent trustee include references to a judicial factor on the insolvent estate of a deceased person,