Section 549 | Meaning of debtor quasi-repo

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

(a)the borrower does not have a debtor repo, and

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

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

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

(4)Condition C is that under that or any other arrangement the borrower or any other person sells any securities at any time.^F1

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

(a)makes provision conferring a right or imposing an obligation on the borrower to buy 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 any arrangement makes other relevant provision if it makes provision—

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

(b)for the discharge of any liability to the borrower 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 buying of the securities or the other securities by the borrower, or

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

would extinguish the financial liability in respect of the advance recorded in the accounts of the borrower.

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