Section 544 | Meaning of creditor quasi-repo

(1)For the purposes of this Chapter a company (“the lender”) has a creditor quasi-repo in any case if—

(a)the lender does not have a creditor repo in that case, and

(b)each of conditions A to E is met in that case.

(2)Condition A is that under an arrangement a person receives from the lender any money or other asset (“the advance”).

(3)Condition B is that, in accordance with generally accepted accounting practice, the accounts of the lender for the period in which the advance is made record a financial asset in respect of the advance.

(4)Condition C is that under that or any other arrangement a person sells any securities at any time to the lender or any other person.

(5)Condition D is that the arrangement or other arrangement—

(a)makes provision conferring a right or imposing an obligation on the lender to sell the securities or any other securities at any subsequent time, or

(b)makes provision conferring such a right or imposing such an obligation on any other person and makes other relevant provision.

(6)For this purpose an arrangement makes other relevant provision if it makes provision—

(a)for the receipt of any money, securities or other asset from the lender under that arrangement for the purpose of enabling the other person to make that subsequent sale, or

(b)for the discharge of any liability to the lender under that arrangement for that purpose (whether by way of set off or otherwise).

(7)Condition E is that, in accordance with generally accepted accounting practice—

(a)the subsequent sale of the securities or the other securities by the lender, or

(b)the receipt of the asset from the lender, or the discharge of the liability to the lender, under the arrangement or other arrangement,

would extinguish the financial asset in respect of the advance recorded in the accounts of the lender.

(8)For the purposes of conditions A to E references to the lender include a firm of which the lender is a member.