Clearing and settlement of transactions in securities

This overview is a guide to the Financial Services content within the Clearing and settlement of transactions in securities subtopic, with links to appropriate materials.

Clearing transactions in securities

Clearing houses are the key providers of clearing infrastructure systems and services.

A clearing house eliminates the risk that a party who has entered into a contract for the sale and purchase of securities will fail to complete the transaction. It does this by interposing itself between the parties, becoming the buyer to the seller and the seller to the buyer—each party, therefore, is exposed to the risk of the clearing house, but not to the risk of the other party. Investors trading through a clearing house therefore do not need to be concerned with the identity or credit quality of their counterparties, but only with the credit quality of the clearing house. Clearing houses provide this service in return for a fee and against the provision of collateral or margin by both parties to a transaction.

Assimilated Regulation (EU) 648/2012 (UK EMIR) provides for the authorisation and regulation of clearing ...

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Latest Financial Services News

Upper Tribunal upholds FCA’s decision to ban and fine two financial services directors for pens...

The Financial Conduct Authority (FCA) has announced that the Upper Tribunal has upheld its decision to ban Toni Fox and David Brian Price from financial services and revoke their senior management approvals. The Tribunal confirmed the imposition of substantial penalties after finding that while at CFP Management Ltd, both directors designed and operated an advice model that resulted in unsuitable pension transfers totalling over £392m across 1,470 cases. Despite their extensive experience, the directors failed to adequately assess clients' financial circumstances and risks, which compromised the integrity of their advice, including for members of the British Steel Pension Scheme. Following recalculations based on updated tax and interest guidelines provided in March 2025, the Tribunal endorsed fines of £567,584 for Fox and £465,415 for Price, concluding that their actions constituted serious breaches of FCA rules and demonstrated a lack of the necessary integrity to operate within the regulated financial services sector.

Financial Services—other developments (30/5/2025)

A round-up of other developments, which have not been covered in full by the LexisNexis Financial Services practical guidance team but may nevertheless be of interest.

FCA welcomes industry backing for faster fund trade settlement

The Financial Conduct Authority (FCA) has welcomed a statement issued jointly by the Investment Association, Personal Investment Management & Financial Advice Association, and the Alternative Investment Management Association supporting faster trade settlement in funds. The statement explains that transactions in listed stocks and bonds across the UK, Switzerland, and the EU will change to a T+1 settlement cycle from 11 October 2027, while UK funds will move to a T+2 settlement cycle where feasible. The FCA has noted that faster settlement is expected to enhance market efficiency, improve liquidity, and reinforce the competitiveness of the UK financial market. It has also emphasised that fund managers should prepare for this transition and provide robust justification for any circumstance where settlement exceeds two business days.

LSB takes enforcement action against SRA after Axiom Ince collapse and client money loss

The Legal Services Board (LSB) has taken enforcement action against the Solicitors Regulation Authority (SRA) following an independent review of issues connected to Axiom Ince Limited. The firm, which expanded rapidly through mergers and acquisitions, collapsed in October 2023, resulting in the loss of approximately £60m in client money and 1,400 job losses. Under its statutory powers provided by the Legal Services Act, the LSB has issued binding directions requiring the SRA to enhance its risk identification and response measures, improve the safeguarding of client money, and strengthen controls to address risks from the concentration of key compliance roles within law firms. The SRA has already initiated a plan to address these issues and is required to comply with the new directions within 12 months, providing progress reports every three months. The process included consultations with the Lord Chancellor, the Competition and Markets Authority (CMA), the Legal Services Consumer Panel, and the Lady Chief Justice.

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