Section 45 Investments and Securities Act 2025

Section 45 of the Investments and Securities Act 2025 is about Modification of insolvency law rules. 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) Subject to the provisions of this Part, the insolvency law provisions shall not apply to —
(a) market contracts as defined in this Act;
(b) action taken under the rules of a securities exchange with respect to market contracts;

(c) action taken under the rules of a financial market infrastructure with respect to market contracts;
(d) action taken under the rules of a financial market infrastructure to transfer cleared client contracts, or settle cleared client contracts or cleared house contracts, in accordance with the default rules of the financial market infrastructure;

(e) where cleared client contracts transferred in accordance with the default rules of a financial market infrastructure was entered into by a clearing member or client as principal, action taken to transfer client trades, or group of client trades, corresponding to those cleared client contracts;
(f) action taken to transfer any collateral or any security over such collateral in conjunction with the transfer of any cleared client contract or client trade as mentioned in paragraphs (d) or (e); and

(g) a transfer of any property made by a financial market infrastructure to —
(i) any client of a participant or member, where such property comprises the collateral remaining on a client account following the completion of the default management process in respect of the participant or member, or
(ii) any other person, in connection with a qualifying property transfer made under paragraphs (d), (e) or (f ) and in each case to the extent that such transfer is made in accordance with the default rules of the financial market infrastructure.

(2) The provisions of this section shall apply in relation to insolvency proceedings in respect of a —
(a) member of a securities exchange;
(b) member of a financial market infrastructure; or
(c) party to a market contract begun after a financial market infrastructure has commenced an action as defined under its default rules in relation to a person that is a party to the contract as principal, but not in relation to any other insolvency proceedings, notwithstanding that rights or liabilities arising from market contracts are to be dealt with in the proceedings.

(3) A debt or other liability arising out of a market contract which is the subject of default proceedings may not be proved in a winding up or other arrangement until completion of the financial market infrastructure’s default proceedings and a debt or other liability which may not be proved or claimed, shall not be taken into account for the purpose of set-off until such completion.

(4) Subject to subsection (3), in an insolvency proceeding, the insolvency office holder appointed is not allowed to select, affirm or avoid individual market contract.

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