Pre-Budget Report 2008 - Insolvency Issues
A new special insolvency procedure for investment firms that hold client assets or client money is to be introduced in response to issues arising in the administration of the UK subsidiary of Lehman Brothers.
A review of the insolvency arrangements for these investment firms will by the summer of 2009 consider:
- the precise definition of the firms to which the new procedure should apply;
- the treatment of unencumbered client money and client assets;
- the treatment of client money and client assets which have been posted as collateral;
- arrangements to enable a temporary continuation of brokerage activities (including the matching of unsettled trades); and
- how the insolvency procedure would work and what the objectives for the new procedure should be.
Following the review, there will be full formal consultation on the draft secondary legislation, in line with normal legislative procedure.
Date: 25th November, 2008
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