(1) This section applies if:

(a)

under provisions of the business rules of a settlement authority, the total number of securities of a particular kind to be transferred on a particular day to a dealer by a subsidiary of the settlement authority in respect of transactions (as defined in the business rules) of a kind or kinds specified in the business rules is set off against the total number of securities of that kind to be transferred on that day by the dealer to the subsidiary in respect of transactions (as so defined) of that kind or those kinds; and

(b)

depending on which of those totals is the greater, the provisions oblige:

(i)

the dealer to transfer to some other person or persons nominated under the provisions; or

(ii)

some other dealer or dealers nominated under the provisions to transfer to the dealer, or to some other person or persons nominated under the provisions;

within a specified period, securities of that kind equal in number to the difference between those totals; and

(c)

as at the end of that period, the obligation to transfer, or any of the obligations to transfer, as the case requires, remains undischarged to the extent of a particular number of securities of that kind (in this section called the default securities ).

(2) If the settlement authority has not taken action as mentioned in subsection (3), the person to which the default securities should have been transferred may make a claim in respect of the failure to transfer the default securities. (3) If, for the purpose of remedying the failure to transfer the default securities, the settlement authority has transferred securities of the same kind and number as the default securities to the person to which the default securities should have been transferred:

(a)

the settlement authority is subrogated to all the rights and remedies of the person in relation to the failure to transfer the default securities; and

(b)

the settlement authority may make a claim in respect of its actions to remedy the failure; and

(c)

any claim made under subsection (2) in respect of the failure is taken not to have been entitled to be made.

(4) Entitlement to make a claim is not affected by a dealer ceasing to be a member organisation of a participating exchange after the obligation to transfer arose. (5) For the purposes of this section, a total number of marketable securities of a particular kind may be zero. (6) In this section: