§ 4404. Clearing organization netting

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1991

   Federal Deposit Insurance Corporation Improvement Act of 1991

   Pub. L. 102–242 title IV § 404 · 105 Stat. 2236

   Enacted · 12 U.S.C. § 4404

   Pub. L. 102–242, title IV, § 404, Dec. 19, 1991, 105 Stat. 2374

   Source evidence

   Code source credit
   Pub. L. 102–242, title IV, § 404, Dec. 19, 1991, 105 Stat. 2374

   Enacted provision · exact public law section
   SEC. 404. CLEARING ORGANIZATION NETTING. (a) General Netting Rule.— Notwithstanding any other provision of law, the covered contractual payment obligations and covered contractual payment entitlements of a member of a clearing organization to and from all other members of a clearing organization shall be netted in accordance with and subject to the conditions of any applicable netting contract. (b) Limitation of Obligation To Make Payment.— The only obligation, if any, of a member of a clearing organization to make payment with respect to covered contractual payment obligations arising under a single netting contract to any other member of a clearing organization shall be equal to its net obligation arising under that netting contract, and no such obligation shall exist if there is no net obligation. (c) Limitation on Right To Receive Payment.— The only right, if any, of a member of a clearing organization to receive payment with respect to a covered contractual payment entitlement arising under a single netting contract from other members of a clearing organization shall be equal to its net entitlement arising under that netting contract, and no such right shall exist if there is no net entitlement. (d) Entitlement of Failed Members.— The net entitlement, if any, of any failed member of a clearing organization shall be paid to the failed member in accordance with, and subject to the conditions of, the applicable netting contract. (e) Obligations of Failed Members.— The net obligation, if any, of any failed member of a clearing organization shall be determined in accordance with, and subject to the conditions of, the applicable netting contract. (f) Limitation on Claims for Entitlement.— A failed member of a clearing organization shall have no recognizable claim against any member of a clearing organization for any amount based on such covered contractual payment entitlements other than its net entitlement. (g) Effectiveness Notwithstanding Status as Member.— This section shall be given effect notwithstanding that a member is a failed member.

2. 2005

   Pub. L. 109–8 § 906(c)(1) · 119 Stat. 23

   1. Added · 12 U.S.C. § 4404(a)

      Pub. L. 109–8, § 906(c)(1), added subsec. (a)

   2. Struck · 12 U.S.C. § 4404(a)

      Pub. L. 109–8, § 906(c)(1), struck out heading and text of former subsec. (a). Text read as follows: “Notwithstanding any other provision of law, the covered contractual payment obligations and covered contractual payment entitlements of a member of a clearing organization to and from all other members of a clearing organization shall be netted in accordance with and subject to the conditions of any applicable netting contract.”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 109–8, § 906(c)(1), added subsec. (a) and struck out heading and text of former subsec. (a). Text read as follows: “Notwithstanding any other provision of law, the covered contractual payment obligations and covered contractual payment entitlements of a member of a clearing organization to and from all other members of a clearing organization shall be netted in accordance with and subject to the conditions of any applicable netting contract.”

   Enacted provision · exact public law section
   (1) by striking subsection (a) and inserting the following: “(a) General Rule.— Notwithstanding any other provision of State or Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal Deposit Insurance Act, paragraphs (8)(E), (8)(F), and (10)(B) of section 207(c) of the Federal Credit Union Act, and any order authorized under section 5(b)(2) of the Securities Investor Protection Act of 1970), the covered contractual payment obligations and the covered contractual payment entitlements of a member of a clearing organization to and from all other members of a clearing organization shall be netted in accordance with and subject to the conditions of any applicable netting contract (except as provided in section 561(b)(2) of title 11, United States Code).” ; and

3. 2005

   Pub. L. 109–8 § 906(c)(2) · 119 Stat. 23

   Added · 12 U.S.C. § 4404(h)

   Pub. L. 109–8, § 906(c)(2), added subsec. (h)

   Source evidence

   Code amendment note
   Subsec. (h). Pub. L. 109–8, § 906(c)(2), added subsec. (h).

   Enacted provision · exact public law section
   (2) by adding at the end the following new subsection: “(h) Enforceability of Security Agreements.— The provisions of any security agreement or arrangement or other credit enhancement related to one or more netting contracts between any 2 members of a clearing organization shall be enforceable in accordance with their terms (except as provided in section 561(b)(2) of title 11, United States Code), and shall not be stayed, avoided, or otherwise limited by any State or Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal Deposit Insurance Act, paragraphs (8)(E), (8)(F), and (10)(B) of section 207(c) of the Federal Credit Union Act, and section 5(b)(2) of the Securities Investor Protection Act of 1970).” .

4. 2006

   Financial Netting Improvements Act of 2006

   Pub. L. 109–390 § 4(b) · 120 Stat. 2692

   Struck and inserted · 12 U.S.C. § 4404(a)

   Pub. L. 109–390 struck out “paragraphs (8)(E), (8)(F), and (10)(B) of” before “section 1821(e)” and “section 1787(c)” and inserted “terminated, liquidated, accelerated, and” after “organization shall be”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 109–390 struck out “paragraphs (8)(E), (8)(F), and (10)(B) of” before “section 1821(e)” and “section 1787(c)” and inserted “terminated, liquidated, accelerated, and” after “organization shall be”.

   Enacted provision · exact public law section
   (b) Enforceability of Clearing Organization Netting Contracts.— Section 404 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4404) is amended— (1) in each of subsections (a) and (h), by striking “paragraphs (8)(E), (8)(F), and (10)(B) of” each place such term appears; and (2) in subsection (a), by inserting “terminated, liquidated, accelerated, and” after “organization shall be”.

   Effective date note
   Amendment by Pub. L. 109–390 not applicable to any cases commenced under Title 11, Bankruptcy, or to appointments made under any Federal or State law, before Dec. 12, 2006, see section 7 of Pub. L. 109–390, set out as a note under section 101 of Title 11, Bankruptcy.

5. 2006

   Financial Netting Improvements Act of 2006

   Pub. L. 109–390 § 4(b)(1) · 120 Stat. 2692

   Struck · 12 U.S.C. § 4404(h)

   Pub. L. 109–390, § 4(b)(1), struck out “paragraphs (8)(E), (8)(F), and (10)(B) of” before “section 1821(e)” and “section 1787(c)”

   Source evidence

   Code amendment note
   Subsec. (h). Pub. L. 109–390, § 4(b)(1), struck out “paragraphs (8)(E), (8)(F), and (10)(B) of” before “section 1821(e)” and “section 1787(c)”.

   Enacted provision · exact public law section
   (1) in each of subsections (a) and (h), by striking “paragraphs (8)(E), (8)(F), and (10)(B) of” each place such term appears; and

   Effective date note
   Amendment by Pub. L. 109–390 not applicable to any cases commenced under Title 11, Bankruptcy, or to appointments made under any Federal or State law, before Dec. 12, 2006, see section 7 of Pub. L. 109–390, set out as a note under section 101 of Title 11, Bankruptcy.

6 of 6 references resolved to an enrolled provision