Statutory Instrument 1988 No. 1344

The Building Societies (Prescribed Contracts) Order 1988

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© Crown Copyright 1988

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1988 No. 1344

BUILDING SOCIETIES

The Building Societies (Prescribed Contracts) Order 1988

The Building Societies Commission, with the consent of the Treasury, in exercise of the powers conferred on it by section 23(2) of the Building Socities Act 1986^[1], and of all other powers enabling it in that behalf, hereby makes the following Order:—

Citation and commencement
    1.    This Order may be cited as the Building Societies (Prescribed Contracts) Order 1988 and shall come into force on 1st October 1988.

Interpretation
    2.—(1)  In this Order—
"the Act" means the Building Societies Act 1986,
"participant" means a party to a prescribed contract to which a society is also a party,
"prescribed contract" means an agreement or a series of agreements the terms of which include terms having the effect of—
 (a) the terms set out for swap contracts in Part I of the Schedule hereto,
 (b) the terms set out for sterling interest rate option contracts in Part II of the Schedule hereto,
 (c) the terms set out for swap option contracts in Part III of the Schedule hereto, or
 (d) the terms set out for sterling interest rate forward and futures contracts in Part IV of the Schedule hereto,
"security", except in Part IV of the Schedule hereto, means an asset which is of a character which societies, or societies of particular descriptions, may hold under section 21 (liquid assets) of the Act or which comprises rights under a prescribed contract whose terms include terms having the effect of the terms set out for sterling interest rate forward and futures contracts in Part IV of the Schedule hereto, and
"society" means a building society.


    (2)  Where reference is made in this Order to any matter within the terms of a prescribed contract being specified, that matter shall be treated for the purposes of this Order as so specified if it is specified or referred to within or can be implied from the terms of that contract, or if it is to be determined in a manner which is set out in that contract.

Prescribed contracts
    3.—(1)  Subject to paragraph (2) below, a society may, for the purposes of section 23(1) of the Act (which empowers societies with qualiftying asset holdings to hedge), effect prescribed contracts.

    (2)  Where the security specified in a prescribed contract to which Part II of the Schedule hereto relates is an asset which is of a character which only societies of a particular description may hold under section 21 of the Act, the power to effect that contract is available only to a society of that description.

Revocation of previous Orders
    4.    The Building Societies (Prescribed Contracts) Order 1986^[2] and the Building Societies (Prescribed Contracts) (Amendment) Order 1987^[3] are hereby revoked.

Transitional provision
    5.    Nothing in this Order shall be taken to invalidate any contract effected by a society as a prescribed contract in accordance with any Order in force under section 23(2) of the Act at the time when the contract was effected.

In witness whereof the common seal of the Building Societies Commission is hereto fixed, and is authenticated by me, a person authorised under paragraph 14 of Schedule 1 to the Building Societies Act 1986, on 22nd July 1988.

P. H. Gevers

Secretary to the Commission

We consent to this Order

Mark Lennox-Boyd

David Lightbown

Two of the Lords Commissioners of Her Majesty's Treasury

25th July 1988

[1] 1986 c. 53. back

[2] S.I. 1986/2098, amended by S.I. 1987/1500. back

[3] S.I. 1987/1500. back

Explanatory Note