# The Stamp Duty and Stamp Duty Reserve Tax (European Central Counterparty N.V.) Regulations 2014

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U.K.

Statutory Instruments

# 2014 No. 9

Stamp Duty

Stamp Duty Reserve Tax

# The Stamp Duty and Stamp Duty Reserve Tax (European Central Counterparty N.V.) Regulations 2014

Made

8th January 2014

Laid before the House of Commons

9th January 2014

Coming into force

30th January 2014

The Treasury make the following Regulations in exercise of the powers conferred by sections 116 and 117 of the Finance Act                           1991 F1.                        

F11991 c. 31. Section 116(4) was amended by paragraph 5 of Schedule 20 to the Financial Services and Markets Act 2000 (c. 8), by paragraph 7 of Schedule 21 to the Finance Act 2007 (c. 11) and by regulation 20 of S.I. 2013/504. Sections 116(1)(b) and 117(b) were amended by section 65 of the Finance Act 2010 (c. 13) and substituted by regulation 20 of S.I. 2013/504.

## Citation, commencement and effectU.K.

1.—(1) These regulations may be cited as the Stamp Duty and Stamp Duty Reserve Tax (European Central Counterparty N.V.) Regulations                     2014 and come into force on 30th January 2014.                  

(2) These Regulations have effect—

(a)for the purposes of the charge to stamp duty, in relation to instruments executed on or after 30th January 2014;                  

(b)for the purposes of the charge to stamp duty reserve tax—                  

(i)in the case of agreements to transfer traded securities or options which are not conditional, in relation to agreements made                        on or after 30th January 2014;                  

(ii)in the case of agreements to transfer traded securities or options which are conditional, in relation to agreements where                        the condition is satisfied on or after 30th January 2014.                  

## InterpretationU.K.

2.  In these Regulations—                  

“clearing member client contract” has the same meaning as in section 155 of the Companies Act 1989 F2;                  

“clearing participant” means a member of ECCN who as such is permitted by the Rules of ECCN to clear facility transactions and/or over the counter                     transactions;                  

“client” means a person who gives instructions to a non-clearing firm for traded securities or options to be sold in a facility transaction                     or an over the counter transaction;                  

“default rules” and “defaulting” have the same meaning as in section 188 of the Companies Act 1989 F3;                  

“ECCN” means European Central Counterparty N.V. F4;                  

“EEA central counterparty” and “third country central counterparty” have the same meaning as in section 285 of the Financial Services and Markets Act 2000 F5;                  

“facility” means a recognised investment exchange within the meaning of sections 116(4)(b) and 117(3) of the Finance Act 1991;                  

“facility transaction” means a transaction in traded securities or options that is made on or reported to a recognised investment exchange;                  

“nominee” means, save in relation to a non-clearing firm or its client (regulation 4(6)(b) and (e)), a person whose business is or                     includes holding traded securities or options as a nominee for ECCN, or another prescribed recognised clearing house, prescribed                     EEA central counterparty or prescribed third country central counterparty acting in its capacity as a person providing clearing                     services in connection with an over the counter transaction or a facility transaction, or as a nominee for a clearing participant;                  

“non-clearing firm” means a person other than a clearing participant who has an agreement with a clearing participant to clear over the counter                     transactions or facility transactions or both;                  

“option” means an option to buy or sell traded securities;                  

“over the counter transaction” means a transaction in traded securities or options made other than on a recognised investment exchange;                  

“traded securities” means stocks and shares which are issued or raised by a body corporate but does not include stocks and shares issued or                     raised by a body corporate not incorporated in the United Kingdom unless—                  

the stocks and shares are registered in a register kept in the United Kingdom by or on behalf of the body corporate; or

in the case of shares, they are paired, within the meaning of section 99(6A) of the Finance Act 1986 F6, with shares issued by a body corporate incorporated in the United Kingdom.                           

F21989 c. 40. Section 155(1) was amended by regulation 4 of S.I. 2013/504.

F3Section 188 has been relevantly amended by regulations 4 and 13 of S.I. 2013/504 and by regulation 2 of S.I. 2013/908.

F4European Central Counterparty N.V. is a recognised clearing house within the meaning of section 285(1)(b) of the Financial Services and Markets Act 2000 (c. 8). Section 285(1)(b) was substituted by regulation 3 of S.I. 2013/504.

F52000 c. 8.

F61986 c. 41. Section 99(6A) was inserted by section 144 of the Finance Act 1988 (c. 39), and was amended by section 113(2) of the Finance Act 1990 (c. 29).

## Prescription of ECCNU.K.

3.  ECCN is prescribed as a recognised clearing house for the purposes of sections 116 and 117 of the Finance Act 1991.                  

## Prescribed circumstances for the purposes of section 116 and 117U.K.

4.—(1) In the circumstances prescribed by paragraph (2) or paragraph (5), the charges to stamp duty and stamp duty reserve tax shall                     be treated as not arising.                  

(2) The circumstances prescribed by this paragraph are where, in connection with a facility transaction or an over the counter                     transaction, the conditions in paragraphs (3) and (4) are met.                  

(3) A clearing member client contract entered into by a defaulting clearing participant (“DCP”) is transferred from the DCP to                     a non-defaulting clearing participant in accordance with the defaulting rules of ECCN.                  

(4) The clearing member client contract referred to in paragraph (3) does not represent the end transaction in the clearing of                     that contract either before or after the transfer.                  

(5) The circumstances prescribed by this paragraph are where, in connection with a facility transaction or an over the counter                     transaction (excluding transactions that come within section 80C and 89AA of the Finance Act 1986 F7), conditions A, B and C are met.                  

(6) Condition A is that traded securities or options are transferred, or agreed to be transferred, from—

(a)a clearing participant or its nominee to another clearing participant or its nominee;                  

(b)a non-clearing firm or its client, or nominee of a non-clearing firm or its client, to a clearing participant or its nominee;                  

(c)a clearing participant or its nominee to ECCN or its nominee;                  

(d)a person other than a clearing participant to ECCN or its nominee, as a result of a failure by a clearing participant to fulfil                        its obligations in respect of the transaction concerned to transfer traded securities or options to ECCN or its nominee;                  

(e)a person other than a clearing participant to a clearing participant or its nominee as a result of a failure by a non-clearing                        firm or its client, or nominee of a non-clearing firm or its client or by another clearing participant or its nominee to fulfil                        its obligations in respect of the transaction concerned to transfer traded securities or options to that clearing participant                        or its nominee;                  

(f)a prescribed recognised clearing house or its nominee to ECCN or its nominee;                  

(g)a prescribed EEA central counterparty or its nominee to ECCN or its nominee;                  

(h)a prescribed third country agreement central counterparty or its nominee to ECCN or its nominee; or                  

(i)ECCN or its nominee to a clearing participant or its nominee.                  

(7) Condition B is that the person to whom those securities or options are agreed to be transferred under any of the agreements                     specified in paragraph (6) (“the relevant agreement”) is required on receipt of those securities or options to transfer traded securities or options under a matching agreement                     to another person or, in the case of an agreement falling within paragraph (6)(d) or (6)(e), would have been so required if                     the failure referred to in those paragraphs had not occurred.                  

(8) Condition C is that where traded securities or options which are the subject of the relevant agreement are received by a clearing                     participant, the agreement must be identified by the clearing participant as an agreement that has been made solely in relation                     to the clearing of those traded securities or options on behalf of a third party.                  

(9) In this regulation “matching agreement” means an agreement under which—                  

(a)the traded securities or options agreed to be transferred are of the same kind as the traded securities or options agreed                        to be transferred under the relevant agreement; and                  

(b)the number and transfer price of the traded securities or options agreed to be transferred are in total identical to the number                        and transfer price of the traded securities or options agreed to be transferred under the relevant agreement.                  

F7Sections 80C and 89AA of the Finance Act 1986 (c. 41) (which were inserted by section 98 and section 103 of the Finance Act 1997 (c. 16)) relate to stock lending transactions.

## Revocation of the Stamp Duty and Stamp Duty Reserve Tax (European Multilateral Clearing Facility N.V.) Regulations 2011U.K.

5.  The Stamp Duty and Stamp Duty Reserve Tax (European Multilateral Clearing Facility N.V.) Regulations 2011 F8 are revoked.                  

F8S.I.2011/668, amended by S.I. 2013/504.

Mark Lancaster

David Evennett

 Two of the Lords Commissioners of Her Majesty's Treasury

8th January 2014

## Explanatory Note

(This note is not part of the Regulations)

These Regulations revoke the Stamp Duty and Stamp Duty Reserve Tax (European Multilateral Clearing Facility N.V.) Regulations                        2011 (S.I. 2011/668) (the “EMCF Regulations”) and replace the EMCF Regulations with these Regulations.                     

The Regulations give relief from stamp duty and stamp duty reserve tax (“SDRT”) to certain transfers of, or agreements to                        transfer, traded securities or options made in the course of trading in those traded securities or options either on a facility                        or over the counter. The transfers and agreements eligible for relief are those involving European Central Counterparty N.V.                        (“ECCN”), and its nominees, (through whom transactions on the facility are cleared) or clearing participants of ECCN and its                        nominees.                     

Regulation 1 provides for citation and commencement and effect, and regulation 2 contains definitions.

Regulation 3 prescribes ECCN as a recognised clearing house for the purposes of the relief.

Regulation 4 prescribes the circumstances in which the stamp duty and SDRT will not be charged.

Regulation 5 revokes the EMCF Regulations. The purpose of the revocation and these Regulations is to reflect the change of                        name of European Multilateral Clearing Facility N.V. (“EMCF”) to ECCN. The change of name from EMCF to ECCN is effective from                        6th January 2014.                     

A Tax Information and Impact Note covering this instrument will be published on the HMRC website at http://hmrc.gov.uk/thelibrary/tiins.htm.