§ 4404. — Clearing organization netting.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC4404]
TITLE 12--BANKS AND BANKING
CHAPTER 45--PAYMENT SYSTEM RISK REDUCTION
SUBCHAPTER I--BILATERAL AND CLEARING ORGANIZATION NETTING
Sec. 4404. 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.
(Pub. L. 102-242, title IV, Sec. 404, Dec. 19, 1991, 105 Stat. 2374.)
Section Referred to in Other Sections
This section is referred to in section 4405 of this title.
