Again, I fully understand the intention behind these clauses and I am not minded to move against them, but I am a bit concerned by some of the interplay between the clauses. I asked the Minister what factors he thought might be taken into account in determining that a CCP is actually a systemic third country CCP, rather than an unsystemic one.

The Bill, on lines 39 to 42 on page 13, suggests that a systemic third country CCP is

“any third country central counterparty that the Bank has determined is systemically important, or is likely to become systemically important, to the financial stability of the United Kingdom.”

The word “systemically” is doing quite a lot of work in that definition. As far as I know, there is no definition of “systemically” in this Bill, or indeed anywhere else, so I am concerned about whether the wording of the Clause is tight enough that everybody, including the Bank of England, knows exactly when it can use these powers and when it cannot.

That is important because of the difference that being designated a systemic third country CCP makes. Under proposed new section 300G to the Financial Services and Markets Act, the Bank of England can exercise most of the powers

“only by the application of corresponding rules”,

according to proposed subsection (1)(a). However, proposed subsection (1)(b) says

“except in the case of systemic third country CCPs…only so far as authorised by regulations made by the Treasury.”

That seems to mean that if the Bank of England forms the view that it is dealing with a systemically important CCP, it is free to act in a way that is not explicitly permitted by Treasury regulations, whereas if the Bank decides that it is not systemically important, the ability to act becomes more restricted.

That is fair enough, until we remember that as far as we know, the Government still intend to bring in a new clause that would allow them to exercise as yet undisclosed powers to call in, revoke or overturn decisions by regulators. Are we therefore in danger of creating a position where, according to the letter of the Bill that I just read out, the Bank of England has the final decision on what is systemically important and what is not? By making that designation, the Bank acquires greater powers to act, without being specifically permitted to do so by the Treasury. However, the Treasury can overturn that, so what is the point of allowing the Bank to—in certain cases—exercise its powers without explicit regulations from the Treasury, if the Treasury can effectively overturn that anyway? There seems to be a potential contradiction there. If we think that the Bank of England is so important for maintaining financial stability that it sometimes must have the power to act without specific regulations from the Treasury, surely to goodness we will not bring in a new clause that allows the Treasury to overturn that.

I have only one other query on these clauses. Does the Minister envisage that CCPs and CSDs that are active in the UK but based overseas will be subject to a different regulatory regime to those based in the UK, or is the expectation that everybody plays by the same rules? That is not particularly clear.

Related to that, will the Minister confirm that where a CCP is based will be a factor in assessing whether it is a systemic third country CCP? Some CCPs will be based in places where we are completely comfortable with the domestic regulation, and some will be some based in places where we are not comfortable with the domestic regulation. Worryingly, there may be some based in jurisdictions where the Government think the standard of financial regulation is okay, but the rest of us think it is far short of okay. What difference, if any, will the geographical location of a jurisdiction where the CCP or CSD is based make to the way that the Treasury expects the Bank of England to act in regulating it?