Stock Exchange Act, 1995

Asset and liability ratios and structures of authorised member firms.

26.—(1) The Bank may impose a requirement on an authorised member firm to keep at all times a proportion of its assets in liquid form (in this section referred to as “liquid assets”) so as to enable the authorised member firm to meet its liabilities as they arise.

(2) An authorised member firm may keep liquid assets in addition to those required for the purpose of complying with subsection (1) of this section.

(3) For the purposes of complying with the requirements of the Bank under subsection (1) of this section, an authorised member firm shall have regard to the range and scale of its business and that of any relevant associated undertaking or related undertaking and the composition and character of its assets and liabilities and those of any such undertaking.

(4) The Bank may, from time to time, impose a requirement on an authorised member firm to maintain—

(a) a specified ratio, or

(b) a ratio which does not exceed a specified ratio, or

(c) a ratio which is not less than a specified ratio,

between its assets and its liabilities and the specified ratio may be expressed as a percentage of the assets or liabilities concerned.

(5) A requirement of the Bank under this section may be expressed to apply to all or any of the following, namely—

(a) all authorised member firms,

(b) authorised member firms of a specified category or specified categories,

(c) the total assets or total liabilities of the authorised member firm or authorised member firms concerned,

(d) specified assets or assets of a specified kind,

(e) specified liabilities or liabilities of a specified kind,

and shall have effect in accordance with the specified terms of the requirement.

(6) A requirement under this section which is in force may be revoked by the Bank or may be amended by a subsequent requirement under the relevant subsection.

(7) The Bank may, from time to time, specify, as respects an authorised member firm, requirements as to the composition of its assets and requirements as to the composition of its liabilities.

(8) In determining, for the purposes of this section, the assets and liabilities of an authorised member firm with which another undertaking is associated or related, there shall be attributed to the authorised member firm, in a manner acceptable to or as may be specified by the Bank, the whole or part of the assets and liabilities of whatever description of the associated undertaking or related undertaking.

(9) Any requirements imposed by the Bank under this section may include requirements imposed for the purposes of applying Council Directive 93/6/EEC of 15 March, 1993(1) or other relevant European Community Directives to the authorised member firm.

(10) In this section—

(a) “specified” means specified by the Bank under this section;

(b) “liabilities” include such contingent liabilities as may be specified by the Bank from time to time for the purposes of this section;

(c) “liquid assets” means assets specified as such for the purposes of this section by the Bank.

(1) O.J. No. L 141 11/6/93.