§ Mr. Wrigglesworthasked the Chancellor of the Exchequer whether a review has been undertaken of the authorised depositary system; and whether he will make a statement.
§ Mr. Robert SheldonYes, Sir, as part of a continuous review of our exchange control machinery. As a result, the following arrangements are being introduced:
- i. Returns to the Bank of England, for monitoring purposes, of sales of investment currency and foreign currency securities for sterling effected for account of those authorised depositaries who as a class are not normally involved in day-to-day transactions in the market. The reports will flow to the Bank of England from those authorised depositaries through whom the transactions pass—mainly Stock Exchange members and authorised banks.
115 - ii. Examination by the Bank of England of the records of dealers in investment currency with the intention of sampling sales by authorised depositaries to check the origin of the dealing instructions and the "premium-worthiness" of the underlying securities.
- iii. Exclusion from 31st March 1977 from automatic appointment as authorised depositaries of holders of a principal's licence for the purposes of the Prevention of Fraud (Investment Acts and members of the Association of Stock and Share Dealers, certain of whom may be eligible for reappointment as authorised depositaries by name, while those not reappointed would be able to apply for permission to deal in sterling securities only.
- iv. In addition, the Bank of England is issuing to all authorised depositaries a memorandum describing the new arrangements and including reminders of points which they need specially to bear in mind.