Rights and liabilities connected with designated system in relation to reverse transfer or onward transfer
16D.—(1) This regulation applies where —
(a)
a right or liability arising from a transfer order effected through a designated system has yet to be settled by a transferee; and
(b)
a failure to transfer the right or liability when transferring a part of the business of a transferor that was transferred to a transferee under a certificate of transfer (whether the transfer is a reverse transfer under section 61 of the Act or an onward transfer under section 63 of the Act) is likely to result in a disruption of the operation of the designated system.
(2) A reverse transfer under section 61 of the Act of a part (but not the whole) of the business of a transferor that was transferred to a transferee under a certificate of transfer —
(a)
must not take effect until after the right or liability is settled; or
(b)
must include the transfer of —
(i)
the right or liability; and
(ii)
any security posted by the transferee in accordance with the designated system rules.
(3) An onward transfer under section 63 of the Act of a part (but not the whole) of the business of a transferor that was transferred to a transferee under a certificate of transfer —
(a)
must not take effect until after the right or liability is settled; or
(b)
must include the transfer of —
(i)
the right or liability; and
(ii)
any security posted by the transferee in accordance with the designated system rules.
(4) Without limiting the circumstances that constitute a disruption of the operation of a designated system, either of the following is considered a disruption of the operation of the designated system in paragraph (1):
(a)
a disruption of the netting or settlement (in accordance with the designated system rules) of a transfer order that is effected through the designated system;
(b)
a disruption of any process to be observed under the designated system rules, upon a default of a participant of the designated system.