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Lord Saatchi: My Lords, I thought I heard the Minister say that in the context of the merged London and Frankfurt exchanges, the regulatory arrangements were not yet clear.

Lord McIntosh of Haringey: My Lords, that was not quite what I said. I said that the exact form of the merged body was not clear which meant that the appropriate regulatory arrangements for that merged

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body were not clear. That does not mean that there is any doubt about the availability of suitable regulatory arrangements.

Lord Saatchi: My Lords, does the Minister accept that the statement that the regulatory arrangements are not yet clear is slightly at odds with his view expressed earlier today that the regulatory arrangements are as contained in this Bill? If they are not yet clear, how can he be certain that the arrangements are as described in this Bill?

Lord McIntosh of Haringey: My Lords, I do not want to leave the House with the wrong impression. This Bill provides for suitable regulatory arrangements for any possible final constitution of the merged body.

Lord Saatchi: My Lords, I shall not press the point further. I am sure that the Minister understands what I am getting at. I should like to study the Minister's response in Hansard--I was distracted by the interest generated in the statement of the noble Lord--before deciding what to do at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 283 [Application by an investment exchange]:

Lord McIntosh of Haringey moved Amendments Nos. 170AT to 170AX:


    Page 149, line 16, leave out subsection (2).


    Page 149, line 23, leave out paragraph (d).

Clause 284 [Application by a clearing house]:


    Page 149, line 39, leave out subsection (2).


    Page 150, line 3, leave out paragraph (d).

Clause 286 [Recognition orders]:


    Page 150, line 31, leave out subsections (2) and (3).

The noble Lord said: My Lords, I beg to move Amendments Nos. 170AT to 170AX en bloc.

The Deputy Speaker (Lord Skelmersdale): My Lords, I am in the hands of the House, but it is a bit naughty.

On Question, amendments agreed to.

Lord McIntosh of Haringey moved Amendment No. 170AY:


    Page 150, line 39, leave out ("299") and insert ("(Recognition orders: role of the Treasury)").

The noble Lord said: My Lords, it is perfectly proper at Report stage to move en bloc amendments which cover more than one clause.

In moving Amendment No. 170AY, I should like to speak also to Amendments Nos. 170B, 170BD, 170BE, 170BM, 170BT, 170BX to 170CG, 170D to 170L and 170V. It takes half an hour to turn over the pages of the amendments. It reminds me of the time that I began to read Proust's A la recherche du temps perdu in French. I say this for the benefit of the noble Lord, Lord Kingsland. It took me two hours to cut the pages, which was as long as I would normally have spent reading an entire book.

9 May 2000 : Column 1513

This group of amendments brings the competition scrutiny arrangement for recognised bodies into line with those which have been put in place for the FSA in Chapter III of Part X. We indicated on a number of occasions that we would table amendments to this end. We have already debated these arrangements as far as concerns the FSA. The key changes which the arrangements make are to give the Competition Commission an important role in scrutiny arrangements and to restrict the role of the Treasury in second-guessing the competition authorities compared with the position now. I hope that, provided noble Lords are satisfied with such details as they wish to have, they agree that the objective of the amendments is wholly admirable.

We believe that these are important changes. Like the FSA, it is possible that recognised bodies which have regulatory functions in relation to the markets that they run and the clearing services that they provide can do things which have an adverse impact on competition. Although there may be good reasons to justify this in a particular case, it is important that these bodies are subject to a robust, thorough and effective external scrutiny in this respect. Ensuring that action can be taken where competition is damaged unnecessarily is vital to getting the regulatory balance right. This was recognised in the Financial Services Act 1986, which put in place a similar competition scrutiny regime for recognised bodies. It is, if anything, even more important now in the age of globalisation.

I should draw attention to two main differences of substance between the arrangements put in place for recognised bodies in Part XVIII and those which we have debated in respect of the FSA in Part X. These are, first, that the regime has to cover applicants for recognition, as well as bodies which are already recognised. This adds not inconsiderably to the complexity of these clauses, compared with those in Part X.

The second difference is that the recognised bodies themselves can exploit the strength of their market position. This is because, in spite of having some regulatory responsibilities, they are also commercial bodies. The FSA is not in the same position and it is therefore necessary for the competition scrutiny regime to be able to consider whether an exchange or clearing house is exploiting its strong market position, for example, to keep potential new entrants at bay. Apart from these differences, the regime put in place is the same as that which we have agreed should apply to the FSA. I hope that I may commend these amendments to the House. I beg to move.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 170B:


    Page 151, line 3, leave out ("299") and insert ("(Recognition orders: role of the Treasury)").

The noble Lord said: My Lords, I beg to move this amendment.

On Question, amendment agreed to.

9 May 2000 : Column 1514

Clause 287 [Liability in relation to recognised body's regulatory functions]:

Lord McIntosh of Haringey moved Amendment No. 170BA:


    Page 151, line 4, leave out from ("body") to ("are") in line 5 and insert ("and its officers and staff").

The noble Lord said: My Lords, I beg to move this amendment, already spoken to.

On Question, amendment agreed to.

Clause 289 [Notification requirements]:

Lord McIntosh of Haringey moved Amendments Nos. 170BB, 170BC, 170BD and 170BE:


    Page 152, line 11, leave out ("or its recognised nominee (if any)").


    Page 152, line 16, leave out ("or its recognised nominee (if any)").


    Page 152, line 40, leave out subsection (8).


    Page 152, line 43, leave out ("(8)") and insert ("(7)").

The noble Lord said: My Lords, I beg to move these amendments en bloc. They have been spoken to.

On Question, amendments agreed to.

Clause 292 [Authority's power to give directions]:

Lord McIntosh of Haringey moved Amendment No. 170BF:


    Page 153, line 38, leave out ("or its recognised nominee (if any)").

The noble Lord said: My Lords, I beg to move this amendment, which has already been spoken to.

On Question, amendment agreed to.

Clause 293 [Variation of recognition order in relation to recognised nominee]:

Lord McIntosh of Haringey moved Amendment No. 170BG:


    Leave out Clause 293.

The noble Lord said: My Lords, I beg to move this amendment, which has already been spoken to.

On Question, amendment agreed to.

Clause 295 [Directions and revocation: procedure]:

Lord McIntosh of Haringey moved Amendments Nos. 170BH, 170BJ,170BK, 170BL and 170BM:


    Page 155, line 8, leave out ("or (4)(b)").


    Page 155, line 15, leave out subsection (4).


    Page 155, line 31, leave out ("or (4)(b)").


    Page 155, line 40, leave out subsection (8).


    Page 156, line 7, leave out subsection (11).

The noble Lord said: My Lords, I beg to move these amendments en bloc. They have already been spoken to.

On Question, amendments agreed to.

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Clause 298 [Interpretation]:

Lord McIntosh of Haringey moved Amendment No. 170BN:


    Page 157, line 23, at end insert--


(""practices" means--
(a) in relation to a recognised investment exchange, the practices of the exchange in its capacity as such; and
(b) in relation to a recognised clearing house, the practices of the clearing house in respect of its clearing arrangements;").

The noble Lord said: My Lords, in moving Amendment No. 170BN, I should like to speak also to Amendments Nos. 170BP, 170BQ, 170BR, 170BS, 170BU, 170BV, 170BW, 170N, 170P, 170R and 170S. These amendments are a further part of the changes that we have said that we should make to bring the competition scrutiny regime in Part XVIII into line with that of Part X. They concern the description of what is covered by the regime. As in the case of the FSA, the director general will keep under review the rules, guidance and practices of recognised bodies.

Amendments Nos. 170BN, 170BP and 170BQ define what the practices of recognised bodies are for that purpose and make a drafting correction concerning the description of the criteria which recognised bodies laid down when determining to whom they will provide clearing services.

Amendments Nos. 170BR and 170N, 170P and 170R simply remove a number of unnecessary references in this part of the Bill to the trading practices of those subject to the rules of recognised exchanges and clearing houses. That is because the regime is concerned with ensuring that the recognised bodies do not require their members to engage in practices which are unnecessarily anti-competitive. It is not concerned with what those members get up to of their own accord. That is a matter covered by the Competition Act 1998.

Amendment No. 170BS brings the description of what the regime is aimed at--things which have a significantly adverse effect on competition--into line with the wording introduced in Part X in Committee.

Finally, Amendments Nos. 170BU, 170BV and 170BW make a drafting correction to Clause 298, which currently talks about guidance where it should talk about regulatory provisions, which includes rules as well as guidance. I beg to move.

On Question, amendment agreed to.


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