Section 55 Investments and Securities Act 2025

Section 55 of the Investments and Securities Act 2025 is about Limitation of protection. It is under Part V (Registration and Regulation of Securities Exchanges, Financial Market Infrastructures and other Self Regulatory Organisations) of the Act. It provides as follows:

(1) This section shall not apply in relation to any transfer order given by a participant which is entered into a system after a —
(a) court has made an order of winding up in respect of that participant or a system operator which is not a participant in the system, or
(b) creditors’ voluntary winding-up resolution has been passed in respect of that participant, unless the conditions mentioned in either subsection (2) or (4) are satisfied.

(2) The conditions referred to in subsection (1) are that the —
(a) transfer order is carried out on the same business day of the system that the event specified in subsection (1) (a) or (b) occurs; and
(b) system operator can show that it did not have notice of that event at the time the transfer order became irrevocable.

(3) For the purposes of subsection (2)(b) the relevant system operator shall be taken to have notice of an event specified in subsection (1)(a) or (b) if it deliberately failed to make enquiries as to that matter in circumstances in which a reasonable person would have done so.

(4) This Part shall only apply where the following conditions are satisfied —
(a) the system operator is a financial market infrastructure which is registered by the Commission to perform clearing and related functions such as a central counterpart, a settlement agent or a clearing house;

(b) a clearing member of that financial market infrastructure has defaulted; and
(c) the transfer order has been entered into the system under the provisions of the default rules of the financial market infrastructure that provide for the transfer of the positions or assets of a clearing member on its default.