49–006 

109TH CONGRESS REPT. 109–648 " ! HOUSE OF REPRESENTATIVES 2d Session Part 1 

FINANCIAL NETTING IMPROVEMENTS ACT OF 2006 

SEPTEMBER 12, 2006.—Ordered to be printed 

Mr. OXLEY, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

[To accompany H.R. 5585] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 5585) to improve the netting process for financial contracts, and for other purposes, having considered the same, report 

favorably thereon without amendment and recommend that the bill 

do pass. 

CONTENTS 

Page 

Purpose and Summary ............................................................................................ 1 

Background and Need for Legislation .................................................................... 2 

Hearings ................................................................................................................... 2 

Committee Consideration ........................................................................................ 2 

Committee Votes ...................................................................................................... 2 

Committee Oversight Findings ............................................................................... 2 

Performance Goals and Objectives ......................................................................... 2 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 3 

Committee Cost Estimate ....................................................................................... 3 

Congressional Budget Office Estimate ................................................................... 3 

Federal Mandates Statement ................................................................................. 4 

Advisory Committee Statement .............................................................................. 4 

Constitutional Authority Statement ...................................................................... 4 

Applicability to Legislative Branch ........................................................................ 4 

Section-by-Section Analysis of the Legislation ...................................................... 4 

Changes in Existing Law Made by the Bill, as Reported ..................................... 9 

PURPOSE AND SUMMARY

H.R. 5585 makes technical changes to the netting and financial 

contract provisions incorporated by Title IX of the Bankruptcy 

Abuse Prevention and Consumer Protection Act of 2005, Pub. L. 

No. 109–8, to update the language to reflect current market and 

regulatory practices, and help reduce systemic risk in the financial 


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markets by clarifying the treatment of certain financial products in 

cases of bankruptcy or insolvency. 

BACKGROUND AND NEED FOR LEGISLATION

H.R. 5585 makes technical changes to the Bankruptcy Abuse 

Prevention and Consumer Protection Act of 2005, Pub. L. No. 109–

8, by strengthening and clarifying the enforceability of early termination and close-out netting provisions and related collateral arrangements in U.S. insolvency proceedings. This bill will also help 

improve harmonization between U.S. insolvency laws and other jurisdictions. The netting provisions incorporated by Title IX of Pub. 

L. No. 109–8, as well as these technical changes, reflect years of 

work by the President’s Working Group on Financial Markets. 

HEARINGS

There were no hearings on H.R. 5585 in the 109th Congress. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

June 14, 2006, and ordered H.R. 5585, the Financial Netting Improvements Act of 2006, reported to the House by a voice vote. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. No record votes were 

taken during the consideration of this legislation. A motion by Mr. 

Oxley to report the bill to the House with a favorable recommendation was agreed to by a voice vote. During the consideration of the 

bill, the following amendment was offered: 

An amendment by Mr. Watt, No. 1, striking section 7, had a 

point of order sustained against its consideration. 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee has held hearings and made 

findings that are reflected in this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee establishes the following performance related goals and objectives for this legislation: 

H.R. 5585 makes technical changes to the netting and financial 

contract provisions incorporated by Title IX of the Bankruptcy 

Abuse Prevention and Consumer Protection Act of 2005, Pub. L. 

No. 109–8, to update the language to reflect current market and 

regulatory practices, and help reduce systemic risk in the financial 

markets by clarifying the treatment of certain financial products in 

cases of bankruptcy or insolvency. 


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NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues prepared by the Director of the Congressional Budget Office pursuant to section 402 of the Congressional 

Budget Act. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

H.R. 5585—Financial Netting Improvements Act of 2006 

Summary: H.R. 5585 would amend banking, bankruptcy, and securities laws related to the disposition of financial contracts in the 

event of insolvency. In such cases, certain types of financial contracts are processed on a net basis to reduce the risk—especially 

the systemic risk associated with activities in derivatives markets—that the failure of one entity will disrupt and endanger financial markets. That process, known as financial netting, involves 

settling mutual obligations at their net value as opposed to each 

obligation’s gross dollar value. H.R. 5585 would update existing 

laws regarding netting to ensure that some of the newer forms of 

contractual arrangements are resolved in the same manner as 

other similar contracts. The bill also would increase the statutory 

filing fee paid by those filing for bankruptcy under Chapter 7 of the 

bankruptcy code in order to raise the compensation paid to private 

trustees appointed to manage a debtor’s estate under such bankruptcy relief. 

Enacting H.R. 5585 could affect direct spending, but CBO estimates that any such changes would not be significant. H.R. 5585 

contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) and would 

impose no costs on state, local, or tribal governments. 

Estimated cost to the Federal Government: Most financial experts believe that the practice of netting financial transactions reduces the systemic risk that could result from the failure of banks, 

thrifts, or credit unions that hold derivative or other similar contracts. Thus, it is possible that clarifying the applicability of the 

netting requirement to some of the newer types of financial contracts could reduce the potential cost of some failures in the future. 

Based on information from federal regulatory agencies, CBO estimates that the impact of H.R. 5585 on the cost or resolving failed 

banks, thrifts, or credit unions would likely be small because the 

provisions in current law would cover most of the contracts used 

by insured institutions. 


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Increasing filing fees and trustee compensation under Chapter 7 

of the bankruptcy code would have no budgetary impact. Under 

current law, $45 of the $245 fee paid by those filing for Chapter 

7 relief is collected by the government on behalf of a private trustee, placed in a (nonbudgetary) deposit account, and paid to the private trustee. Those amounts are not owned by the Federal Government and are not recorded on the budget. H.R. 5585 would increase 

the Chapter 7 filing fee by $55 and increase the trustee’s compensation by a corresponding amount. 

Intergovernmental and private-sector impact: H.R. 5585 contains 

no intergovernmental or private-sector mandates as defined in 

UMRA and would impose no costs on state, local, or tribal governments. 

Estimate prepared by: Federal Costs: Kathleen Gramp and Gregory Waring; Impact on state, local, and tribal governments: Sarah 

Puro; Impact on the private sector: Fatimot Ladipo and Judy Ruud. 

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that the Constitutional 

Authority of Congress to enact this legislation is provided by Article 1, section 8, clause 1 (relating to the general welfare of the 

United States), clause 3 (relating to the power to regulate interstate commerce), and clause 4 (relating to the power to establish 

uniform laws on the subject of Bankruptcies). 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section sets forth the short title of this legislation—the ‘‘Financial Netting Improvements Act of 2006’’. 

Section 2. Treatment of certain agreements by conservators or receivers or depository institutions 

This section amends the Federal Deposit Insurance Act’s (FDIA) 

and Federal Credit Union Act’s (FCUA) definitions of ‘‘securities 

contract’’, ‘‘forward contract’’ and ‘‘swap agreement’’ to make a 


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number of technical and clarifying changes. It is intended that the 

legislative history and case law surrounding those terms, to the 

date of this amendment, be incorporated into the legislative history 

of the FDIA and FCUA. 

The definition of ‘‘securities contract’’ and ‘‘forward contract’’

The reference to ‘‘repurchase or reverse repurchase’’ transactions 

in section 2(a)(1)(A)(ii) is intended to confirm that a repurchase or 

reverse repurchase transaction included within the definitions of 

‘‘securities contract’’ or ‘‘forward contract’’ is not limited by the definition of ‘‘repurchase agreement’’ contained in 12 U.S.C. section 

1821(e)(8)(D)(v). 

The definition of ‘‘securities contract’’

The reference in sections 2(a)(1)(B) and 2(a)(2)(B) to guarantees ‘‘(including by novation)’’ by or to any securities clearing agency, together with the reference in the definition of ‘‘securities contract’’ (as amended by Pub. L. No. 109–8) to ‘‘any other agreement or 

transaction that is similar’’ is intended to confirm that the language covers other arrangements that have an effect similar to a 

guarantee or a novation. 

The reference in sections 2(a)(1)(E) and 2(a)(2)(E) to the inclusion 

of ‘‘any extension of credit for the clearance or settlement of securities transactions’’ is intended to confirm that the definition encompasses credit extended for the execution, clearance and settlement 

of securities transactions, which provide important liquidity to the 

securities markets. Also, the inclusion of ‘‘any loan transaction coupled with a securities collar transaction, any prepaid securities forward transaction, or any total return swap transaction coupled 

with a securities sale transaction’’ is intended to confirm that similar agreements covered by the definition of securities contract include these transactions which are functionally similar to other 

enumerated transactions in the definition, even though their form 

might differ. The common thread of these transactions is that they 

involve financial intermediaries—stockbrokers, financial institutions, financial participants or securities clearing agencies—that 

often hedge their risk on these transactions through other market 

transactions, repledge securities collateral received under these 

transactions, or both. As such these transactions implicate the systemic risk concerns that are addressed by the safe harbors. 

The definition of ‘‘swap agreement’’

Section 2(c) amends the definition of ‘‘swap agreement’’ to include 

‘‘weather swap, option, future, or forward agreement; an emissions 

swap, option, future, or forward agreement; or an inflation swap, 

option, future, or forward agreement.’’ The inclusion of ‘‘weather 

swap, option, future, or forward agreement; an emissions swap, option, future, or forward agreement; or an inflation swap, option, future, or forward agreement’’ is intended to confirm that ‘‘similar 

agreements’’ covered by the definition of ‘‘swap agreement’’ include 

these transactions. 

Section 2(c) expands the definition of ‘‘swap agreement’’ to include ‘‘any agreement or transaction that is similar to any other 

agreement or transaction referred to in [section 11(e)(8)(D)(vi) of 

the FDIA/section 207(c)(8)(D)(vi) of the FCUA] and is of a type that 


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has been, is presently, or in the future becomes, the subject of recurrent dealings in the swap or other derivatives markets * * * 

and that is a forward, swap, future, option, or spot transaction on 

one or more rates, currencies, commodities, equity securities or 

other equity instruments, debt securities or other debt instruments, 

quantitative measures associated with an occurrence, extent of an 

occurrence, or contingency associated with a financial, commercial, 

or economic consequence, or economic or financial indices or measures of economic or financial risk or value.’’ The proposed amendments would change the reference to ‘‘swap markets’’ to ‘‘swap or 

other derivatives markets’’ in order to avoid any suggestion that 

new developments are limited to transactions that are technically 

swaps as opposed to other types of derivatives, such as options. The 

addition of ‘‘or spot transaction’’ in the provision regarding ‘‘similar 

agreements’’ is a technical correction intended to refer to spot 

transactions that are similar to the spot transactions already enumerated in the definition of ‘‘swap agreement.’’ However, the reference in the definition of ‘‘swap agreement’’ to spot transactions 

in commodities is not intended to encompass ordinary sales of 

goods contracts, but rather financial market transactions in commodities. 

The term ‘‘swap agreement’’ includes transactions documented as ‘‘contracts for differences,’’ which is another way to document the 

enumerated transactions. 

Section 3. Clarifying amendments relating to definition of person 

This section expands the FDIA’s and FCUA’s definition of ‘‘person’’ for purposes of determining who is eligible for termination, 

netting and close out rights in the event of insolvency. The revised 

definition would include any governmental entity in addition to any 

entity included in the definition of ‘‘person’’ under Section 1 of Title 

1 of the United States Code. 

Section 4. Federal Deposit Insurance Corporation Improvement Act 

of 1991 

This section amends sections 403 and 404 of the Federal Deposit 

Insurance Corporation Improvement Act of 1991 to clarify that 

both financial institutions and clearing organizations are subject to 

the limitations of the entire section 11(e) of the FDIA and section 

207 of FCUA. 

Section 5. Conforming amendments 

This section amends the Federal Bankruptcy Code’s definitions of 

‘‘swap agreement’’, ‘‘forward contract’’ and ‘‘securities contract’’ to 

make a number of technical and clarifying changes. This section 

also makes certain changes to the automatic stay provisions of the 

Bankruptcy Code and to the avoidance powers of a trustee under 

the Bankruptcy Code. This section also amends the Securities Investor Protection Act and amends the savings clause included in 

Pub. L. No. 109–8. 

The definition of ‘‘swap agreement’’

Section 5(a)(1)(D) amends the definition of ‘‘swap agreement’’ to 

include a weather swap, option, future, or forward agreement; an 

emissions swap, option, future, or forward agreement; or an inflaVerDate Aug 31 2005 23:44 Sep 15, 2006 Jkt 049006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR648P1.XXX HR648P1

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tion swap, option, future, or forward agreement. The inclusion of 

‘‘weather swap, option, future, or forward agreement; an emissions 

swap, option, future, or forward agreement; or an inflation swap, 

option, future, or forward agreement’’ is intended to confirm that ‘‘similar agreements’’ covered by the definition of ‘‘swap agreement’’ include these transactions. 

Section 5(a)(1)(D) expands the definition of ‘‘swap agreement’’ to 

include ‘‘any agreement or transaction that is similar to any other 

agreement or transaction referred to in [section 101(53B) of the 

Bankruptcy Code] and that is of a type that has been, is presently, 

or in the future becomes, the subject of recurrent dealings in the 

swap or other derivatives markets * * * and is a forward, swap, 

future, option, or spot transaction on one or more rates, currencies, 

commodities, equity securities or other equity instruments, debt securities or other debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial, or economic consequence, or 

economic or financial indices or measures of economic or financial 

risk or value.’’ The proposed amendments would change the reference to ‘‘swap markets’’ to ‘‘swap or other derivatives markets’’ in 

order to avoid any suggestion that new developments are limited 

to transactions that are technically swaps as opposed to other types 

of derivatives, such as options. The addition of ‘‘or spot transaction’’ in the provision regarding ‘‘similar agreements’’ is a technical correction intended to refer to spot transactions that are similar to the 

spot transactions already enumerated in the definition of ‘‘swap 

agreement.’’ However, the reference in the definition of ‘‘swap 

agreement’’ to spot transactions in commodities is not intended to 

encompass ordinary sales of goods contracts, but rather financial 

market transactions in commodities. 

The term ‘‘swap agreement’’ includes transactions documented as ‘‘contracts for differences,’’ which is another way to document the 

enumerated transactions. 

The automatic stay 

Section 5(a)(2) amends section 362(b) of the Bankruptcy Code to 

protect enforcement, free from the automatic stay, of collateral, 

setoff or netting provisions in commodity contracts, forward contracts, securities contracts, repurchase agreements or swap agreements and in master netting agreements and security agreements 

or arrangements or other credit enhancements related to one or 

more swap agreements or master netting agreements. These 

changes conform the provisions of the Bankruptcy Code to the parallel provisions of the FDIA and FCUA to confirm that Sections 

362(b)(6), (7) and (17) protect, free from the automatic stay, all 

rights previously protected by Sections 362(b)(6), (7) and (17), including self-help foreclosure-on-collateral rights, setoff rights and 

netting rights (including foreclosure on, and setoff against, cash 

and securities held to margin or secure claims for margin payments 

and settlement payments, title transfer arrangements and the 

right to offset obligations owed against collateral pledged to the 

debtor). The provisions protect the exercise of ‘‘contractual rights’’

as defined in Sections 555, 556, 559, or 560, as appropriate, which 

include not only rights evidenced by agreements between the parties, but other rights as set forth in those definitions. 


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The definition of ‘‘securities contract’’

The reference in section 5(a)(3)(B) to guarantees ‘‘(including by 

novation)’’ by or to any securities clearing agency, together with the 

reference in the definition of ‘‘securities contract’’ (as amended by 

Pub. L. No. 109–8) to ‘‘any other agreement or transaction that is 

similar,’’ is intended to confirm that the language covers other arrangements that have an effect similar to a guarantee or a novation. 

Under section 5(a)(3)(E), the inclusion of ‘‘any extension of credit 

for the clearance or settlement of securities transactions’’ is intended to confirm that the definition encompasses credit extended 

for the execution, clearance and settlement of securities transactions, which provide important liquidity to the securities markets. Also, the inclusion of ‘‘any loan transaction coupled with a securities collar transaction, any prepaid securities forward transaction, or any total return swap transaction coupled with a securities sale transaction’’ is intended to confirm that transactions 

which are functionally similar to other enumerated transactions in 

the definition are covered by the definition of ‘‘securities contract’’, even though their form might differ. The common thread of these 

transactions is that they involve financial intermediaries—stockbrokers, financial institutions, financial participants or securities 

clearing agencies—that often hedge their risk on these transactions 

through other market transactions, repledge securities collateral 

received under these transactions, or both. 

Trustee avoidance powers 

Section 5(b) amends Sections 546(e) and 546(f) of the Bankruptcy 

Code, which protect margin payments and settlement payments, to 

also protect transfers made by or to a commodity broker, forward 

contract merchant, stockbroker, financial institution, financial participant, securities clearing agency, or repo participant, in connection with a securities contract, commodity contract, forward contract, or repurchase agreement. This amendment conforms the language of Sections 546(e) and 546(f) to the language in 546(g), regarding the protection of transfers in connection with swap agreements. 

Section 6. Walkaway clauses 

Section 5 amends the ‘‘walkaway clause’’ provision of the FDIA 

(Section 11(e)(8)(G) of the FDIA) and the FCUA (Section 

207(c)(8)(G)), both of which were added by Title IX of S. 256, to 

clarify the ability of the receiver, to enforce contracts. 

Section 7. Bankruptcy trustee compensation 

Section 7 amends titles 11 and 28 of the United States Code to 

increase the compensation paid to a case trustee for administering 

a chapter 7 bankruptcy case from $60 to $100. Under current law, 

the trustee’s $60 fee is paid out of the statutory and miscellaneous 

fees that a debtor must pay to commence a chapter 7 bankruptcy 

case, which currently total $299. The provision effectuates the increase by: (1) reclassifying the trustee’s compensation to be entirely 

derived from the statutory filing fee; (2) increasing the statutory 

filing fee by $40; and (3) adjusting the percentage of the statutory 

filing fee allocated to the United States Trustee System Fund and 


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the fund established pursuant to 28 U.S.C. § 1931 to ensure that 

the respective amounts these funds and the Treasury receive remain the same. In addition, section 7 deletes section 10101(a)(2) of 

the Deficit Reduction Act of 2005, Pub. L. No. 109–171, which was 

intended to increase the statutory chapter 11 filing fee, but was incorrectly drafted. 

In recognition of the fact that the statutory filing fees have been 

raised recently on two prior occasions, the Committee on the Judiciary urges the Judicial Conference of the United States to be sensitive to the impact these increases have on chapter 7 debtors 

should the Conference consider prescribing additional fees pursuant to 28 U.S.C. § 1930(b). 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

FEDERAL DEPOSIT INSURANCE ACT 

* * * * * * * 

SEC. 11. (a) * * * 

* * * * * * * 

(e) PROVISIONS RELATING TO CONTRACTS ENTERED INTO BEFORE

APPOINTMENT OF CONSERVATOR OR RECEIVER.—

(1) * * * 

* * * * * * * 

(8) CERTAIN QUALIFIED FINANCIAL CONTRACTS.— (A) * * * 

* * * * * * * 

(D) CERTAIN CONTRACTS AND AGREEMENTS DEFINED.—

For purposes of this subsection, the following definitions 

shall apply: 

(i) * * * 

(ii) SECURITIES CONTRACT.—The term ‘‘securities 

contract’’—

(I) means a contract for the purchase, sale, or 

loan of a security, a certificate of deposit, a mortgage loan, øor¿ any interest in a mortgage loan, a 

group or index of securities, certificates of deposit, 

or mortgage loans or interests therein (including 

any interest therein or based on the value thereof) 

or any option on any of the foregoing, including 

any option to purchase or sell any such security, 

certificate of deposit, mortgage loan, interest, 

group or index, or option, and including any repurchase or reverse repurchase transaction on any 

such security, certificate of deposit, mortgage loan, 

interest, group or index, or option (whether or not 

such repurchase or reverse repurchase transaction 


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is a ‘‘repurchase agreement’’, as defined in clause 

(v)); 

* * * * * * * 

(IV) means the guarantee (including by novation) by or to any securities clearing agency of any 

settlement of cash, securities, certificates of deposit, mortgage loans or interests therein, group 

or index of securities, certificates of deposit, or 

mortgage loans or interests therein (including any 

interest therein or based on the value thereof) or 

option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or 

index, or option (whether or not such settlement is 

in connection with any agreement or transaction 

referred to in subclauses (I) through (XII) (other 

than subclause (II)); 

* * * * * * * 

(VI) means any extension of credit for the clearance or settlement of securities transactions; 

(VII) means any loan transaction coupled with a 

securities collar transaction, any prepaid securities 

forward transaction, or any total return swap 

transaction coupled with a securities sale transaction; 

ø(VI)¿ (VIII) means any other agreement or 

transaction that is similar to any agreement or 

transaction referred to in this clause; 

ø(VII)¿ (IX) means any combination of the agreements or transactions referred to in this clause; 

ø(VIII)¿ (X) means any option to enter into any 

agreement or transaction referred to in this 

clause; 

ø(IX)¿ (XI) means a master agreement that provides for an agreement or transaction referred to 

in subclause (I), (III), (IV), (V), (VI), (VII), øor 

(VIII)¿ (VIII), (IX), or (X), together with all supplements to any such master agreement, without 

regard to whether the master agreement provides 

for an agreement or transaction that is not a securities contract under this clause, except that the 

master agreement shall be considered to be a securities contract under this clause only with respect to each agreement or transaction under the 

master agreement that is referred to in subclause 

(I), (III), (IV), (V), (VI), (VII), øor (VIII)¿ (VIII), 

(IX), or (X); and 

ø(X)¿ (XII) means any security agreement or arrangement or other credit enhancement related to 

any agreement or transaction referred to in this 

clause, including any guarantee or reimbursement 


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obligation in connection with any agreement or 

transaction referred to in this clause. 

* * * * * * * 

(iv) FORWARD CONTRACT.—The term ‘‘forward contract’’ means— (I) a contract (other than a commodity contract) 

for the purchase, sale, or transfer of a commodity 

or any similar good, article, service, right, or interest which is presently or in the future becomes the 

subject of dealing in the forward contract trade, or 

product or byproduct thereof, with a maturity date 

more than 2 days after the date the contract is entered into, including, a repurchase øtransaction, 

reverse repurchase transaction¿ or reverse repurchase transaction (whether or not such repurchase 

or reverse repurchase transaction is a ‘‘repurchase 

agreement’’, as defined in clause (v)), consignment, 

lease, swap, hedge transaction, deposit, loan, option, allocated transaction, unallocated transaction, or any other similar agreement; 

* * * * * * * 

(vi) SWAP AGREEMENT.—The term ‘‘swap agreement’’ means—

(I) any agreement, including the terms and conditions incorporated by reference in any such 

agreement, which is an interest rate swap, option, 

future, or forward agreement, including a rate 

floor, rate cap, rate collar, cross-currency rate 

swap, and basis swap; a spot, same day-tomorrow, 

tomorrow-next, forward, or other foreign exchange 

øor precious metals, precious metals, or other commodity agreement; a currency swap, option, future, or forward agreement; an equity index or equity swap, option, future, or forward agreement; a 

debt index or debt swap, option, future, or forward 

agreement; a total return, credit spread or credit 

swap, option, future, or forward agreement; a commodity index or commodity swap, option, future, 

or forward agreement; øor a weather swap, weather derivative, or weather option¿ weather swap, 

option, future, or forward agreement; an emissions 

swap, option, future, or forward agreement; or an 

inflation swap, option, future, or forward agreement; 

(II) any agreement or transaction that is similar 

to any other agreement or transaction referred to 

in this clause and that is of a type that has been, 

is presently, or in the future becomes, the subject 

of recurrent dealings in the swap or other derivatives markets (including terms and conditions incorporated by reference in such agreement) and 

that is a forward, swap, øfuture, or option¿ future, 

option, or spot transaction on one or more rates, 

currencies, commodities, equity securities or other 


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equity instruments, debt securities or other debt 

instruments, quantitative measures associated 

with an occurrence, extent of an occurrence, or 

contingency associated with a financial, commercial, or economic consequence, or economic or financial indices or measures of economic or financial risk or value; 

* * * * * * * 

Such term is applicable for purposes of this subsection 

only and shall not be construed or applied so as to 

challenge or affect the characterization, definition, or 

treatment of any swap agreement under any other 

statute, regulation, or rule, including øthe Securities 

Act of 1933, the Securities Exchange Act of 1934, the 

Public Utility Holding Company Act of 1935, the Trust 

Indenture Act of 1939, the Investment Company Act of 

1940, the Investment Advisers Act of 1940, the Securities Investor Protection Act of 1970, the Commodity 

Exchange Act, the Gramm-Leach-Bliley Act, and the 

Legal Certainty for Bank Products Act of 2000¿ the 

Gramm-Leach-Bliley Act, the Legal Certainty for Bank 

Products Act of 2000, the securities laws (as such term 

is defined in section 3(a)(47) of the Securities Exchange 

Act of 1934) and the Commodity Exchange Act. 

* * * * * * * 

(ix) PERSON.—The term ‘‘person’’ includes any governmental entity in addition to any entity included in 

the definition of such term in section 1 of title 1, 

United States Code. 

* * * * * * * 

(G) WALKAWAY CLAUSES NOT EFFECTIVE.—

(i) * * * 

ø(ii) WALKAWAY CLAUSE DEFINED.—For purposes of 

this subparagraph, the term ‘‘walkaway clause’’ means 

a provision in a qualified financial contract that, after 

calculation of a value of a party’s position or an 

amount due to or from 1 of the parties in accordance 

with its terms upon termination, liquidation, or acceleration of the qualified financial contract, either does 

not create a payment obligation of a party or extinguishes a payment obligation of a party in whole or in 

part solely because of such party’s status as a nondefaulting party.¿ 

(ii) LIMITED SUSPENSION OF CERTAIN OBLIGATIONS.—

In the case of a qualified financial contract referred to 

in clause (i), any payment or delivery obligations otherwise due from a party pursuant to the qualified financial contract shall be suspended from the time the receiver is appointed until the earlier of—

(I) the time such party receives notice that such 

contract has been transferred pursuant to subparagraph (A); or 


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(II) 5:00 p.m. (eastern time) on the business day 

following the date of the appointment of the receiver. 

(iii) WALKAWAY CLAUSE DEFINED.—For purposes of 

this subparagraph, the term ‘‘walkaway clause’’ means 

any provision in a qualified financial contract that 

suspends, conditions, or extinguishes a payment obligation of a party, in whole or in part, or does not create 

a payment obligation of a party that would otherwise 

exist, solely because of such party’s status as a nondefaulting party in connection with the insolvency of 

an insured depository institution that is a party to the 

contract or the appointment of or the exercise of rights 

or powers by a conservator or receiver of such depository institution, and not as a result of a party’s exercise 

of any right to offset, setoff, or net obligations that exist 

under the contract, any other contract between those 

parties, or applicable law. 

* * * * * * * 

SECTION 207 OF THE FEDERAL CREDIT UNION ACT 

PAYMENT OF INSURANCE

SEC. 207. (a) * * * 

* * * * * * * 

(c) PROVISIONS RELATING TO CONTRACTS ENTERED INTO BEFORE

APPOINTMENT OF CONSERVATOR OR LIQUIDATING AGENT.— (1) * * * 

* * * * * * * 

(8) CERTAIN QUALIFIED FINANCIAL CONTRACTS.— (A) * * * 

* * * * * * * 

(D) CERTAIN CONTRACTS AND AGREEMENTS DEFINED.—

For purposes of this subsection, the following definitions 

shall apply: 

(i) * * * 

(ii) SECURITIES CONTRACT.—The term ‘‘securities 

contract’’—

(I) means a contract for the purchase, sale, or 

loan of a security, a certificate of deposit, a mortgage loan, øor¿ any interest in a mortgage loan, a 

group or index of securities, certificates of deposit, 

or mortgage loans or interests therein (including 

any interest therein or based on the value thereof) 

or any option on any of the foregoing, including 

any option to purchase or sell any such security, 

certificate of deposit, mortgage loan, interest, 

group or index, or option, and including any repurchase or reverse repurchase transaction on any 

such security, certificate of deposit, mortgage loan, 

interest, group or index, or option (whether or not 

such repurchase or reverse repurchase transaction 


PWALKER on PRODPC60 with HEARING
14 

is a ‘‘repurchase agreement’’, as defined in clause 

(v)); 

* * * * * * * 

(IV) means the guarantee (including by novation) by or to any securities clearing agency of any 

settlement of cash, securities, certificates of deposit, mortgage loans or interests therein, group 

or index of securities, certificates of deposit, or 

mortgage loans or interests therein (including any 

interest therein or based on the value thereof) or 

option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or 

index, or option (whether or not such settlement is 

in connection with any agreement or transaction 

referred to in subclauses (I) through (XII) (other 

than subclause (II)); 

* * * * * * * 

(VI) means any extension of credit for the clearance or settlement of securities transactions; 

(VII) means any loan transaction coupled with a 

securities collar transaction, any prepaid securities 

forward transaction, or any total return swap 

transaction coupled with a securities sale transaction; 

ø(VI)¿ (VIII) means any other agreement or 

transaction that is similar to any agreement or 

transaction referred to in this clause; 

ø(VII)¿ (IX) means any combination of the 

agreements or transactions referred to in this 

clause; 

ø(VIII)¿ (X) means any option to enter into any 

agreement or transaction referred to in this 

clause; 

ø(IX)¿ (XI) means a master agreement that provides for an agreement or transaction referred to 

in subclause (I), (III), (IV), (V), (VI), (VII), øor 

(VIII)¿ (VIII), (IX), or (X), together with all supplements to any such master agreement, without 

regard to whether the master agreement provides 

for an agreement or transaction that is not a securities contract under this clause, except that the 

master agreement shall be considered to be a securities contract under this clause only with respect to each agreement or transaction under the 

master agreement that is referred to in subclause 

(I), (III), (IV), (V), (VI), (VII), øor (VIII)¿ (VIII), 

(IX), or (X); and 

ø(X)¿ (XII) means any security agreement or arrangement or other credit enhancement related to 

any agreement or transaction referred to in this 

clause, including any guarantee or reimbursement 


PWALKER on PRODPC60 with HEARING
15 

obligation in connection with any agreement or 

transaction referred to in this clause. 

* * * * * * * 

(iv) FORWARD CONTRACT.—The term ‘‘forward contract’’ means— (I) a contract (other than a commodity contract) 

for the purchase, sale, or transfer of a commodity 

or any similar good, article, service, right, or interest which is presently or in the future becomes the 

subject of dealing in the forward contract trade, or 

product or byproduct thereof, with a maturity date 

more than 2 days after the date the contract is entered into, including, a repurchase øtransaction, 

reverse repurchase transaction¿ or reverse repurchase transaction (whether or not such repurchase 

or reverse repurchase transaction is a ‘‘repurchase 

agreement’’, as defined in clause (v)), consignment, 

lease, swap, hedge transaction, deposit, loan, option, allocated transaction, unallocated transaction, or any other similar agreement; 

* * * * * * * 

(vi) SWAP AGREEMENT.—The term ‘‘swap agreement’’ means—

(I) any agreement, including the terms and conditions incorporated by reference in any such 

agreement, which is an interest rate swap, option, 

future, or forward agreement, including a rate 

floor, rate cap, rate collar, cross-currency rate 

swap, and basis swap; a spot, same day-tomorrow, 

tomorrow-next, forward, or other foreign exchange 

øor precious metals¿, precious metals, or other 

commodity agreement; a currency swap, option, 

future, or forward agreement; an equity index or 

equity swap, option, future, or forward agreement; 

a debt index or debt swap, option, future, or forward agreement; a total return, credit spread or 

credit swap, option, future, or forward agreement; 

a commodity index or commodity swap, option, future, or forward agreement; øor a weather swap, 

weather derivative, or weather option¿ weather 

swap, option, future, or forward agreement; an 

emissions swap, option, future, or forward agreement; or an inflation swap, option, future, or forward agreement; 

(II) any agreement or transaction that is similar 

to any other agreement or transaction referred to 

in this clause and that is of a type that has been, 

is presently, or in the future becomes, the subject 

of recurrent dealings in the swap or other derivatives markets (including terms and conditions incorporated by reference in such agreement) and 

that is a forward, swap, øfuture, or option¿ future, 

option, or spot transaction on one or more rates, 

currencies, commodities, equity securities or other 


PWALKER on PRODPC60 with HEARING
16 

equity instruments, debt securities or other debt 

instruments, quantitative measures associated 

with an occurrence, extent of an occurrence, or 

contingency associated with a financial, commercial, or economic consequence, or economic or financial indices or measures of economic or financial risk or value; 

* * * * * * * 

Such term is applicable for purposes of this subsection 

only and shall not be construed or applied so as to 

challenge or affect the characterization, definition, or 

treatment of any swap agreement under any other 

statute, regulation, or rule, including øthe Securities 

Act of 1933, the Securities Exchange Act of 1934, the 

Public Utility Holding Company Act of 1935, the Trust 

Indenture Act of 1939, the Investment Company Act of 

1940, the Investment Advisers Act of 1940, the Securities Investor Protection Act of 1970, the Commodity 

Exchange Act, the Gramm-Leach-Bliley Act, and the 

Legal Certainty for Bank Products Act of 2000¿ the 

Gramm-Leach-Bliley Act, the Legal Certainty for Bank 

Products Act of 2000, the securities laws (as such term 

is defined in section 3(a)(47) of the Securities Exchange 

Act of 1934) and the Commodity Exchange Act. 

* * * * * * * 

(ix) PERSON.—The term ‘‘person’’ includes any governmental entity in addition to any entity included in 

the definition of such term in section 1 of title 1, 

United States Code. 

* * * * * * * 

(G) WALKAWAY CLAUSES NOT EFFECTIVE.—

(i) * * * 

ø(ii) WALKAWAY CLAUSE DEFINED.—For purposes of 

this subparagraph, the term ‘‘walkaway clause’’ means 

a provision in a qualified financial contract that, after 

calculation of a value of a party’s position or an 

amount due to or from 1 of the parties in accordance 

with its terms upon termination, liquidation, or acceleration of the qualified financial contract, either does 

not create a payment obligation of a party or extinguishes a payment obligation of a party in whole or in 

part solely because of such party’s status as a nondefaulting party.¿ 

(ii) LIMITED SUSPENSION OF CERTAIN OBLIGATIONS.—

In the case of a qualified financial contract referred to 

in clause (i), any payment or delivery obligations otherwise due from a party pursuant to the qualified financial contract shall be suspended from the time the liquidating agent is appointed until the earlier of—

(I) the time such party receives notice that such 

contract has been transferred pursuant to subparagraph (A); or 


PWALKER on PRODPC60 with HEARING
17 

(II) 5:00 p.m. (eastern time) on the business day 

following the date of the appointment of the liquidating agent. 

(iii) WALKAWAY CLAUSE DEFINED.—For purposes of 

this subparagraph, the term ‘‘walkaway clause’’ means 

any provision in a qualified financial contract that 

suspends, conditions, or extinguishes a payment obligation of a party, in whole or in part, or does not create 

a payment obligation of a party that would otherwise 

exist, solely because of such party’s status as a nondefaulting party in connection with the insolvency of 

an insured credit union or the appointment of or the 

exercise of rights or powers by a conservator or liquidating agent of such credit union, and not as a result 

of a party’s exercise of any right to offset, setoff, or net 

obligations that exist under the contract, any other contract between those parties, or applicable law. 

* * * * * * * 

FEDERAL DEPOSIT INSURANCE CORPORATION 

IMPROVEMENT ACT OF 1991 

* * * * * * * 

TITLE IV—MISCELLANEOUS 

PROVISIONS 

Subtitle A—Payment System Risk 

Reduction 

CHAPTER 1—BILATERAL AND CLEARING 

ORGANIZATION NETTING 

* * * * * * * 

SEC. 403. BILATERAL NETTING. 

(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, øparagraphs (8)(E), (8)(F), and (10)(B) of¿ section 207(c) of the Federal 

Credit Union Act, or 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 between any 2 financial institutions shall be terminated, 

liquidated, accelerated, and netted in accordance with, and subject 

to the conditions of, the terms of any applicable netting contract 

(except as provided in section 561(b)(2) of title 11, United States 

Code). 

* * * * * * * 

(f) 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 financial institutions shall be enforceable in accordance with their terms 


PWALKER on PRODPC60 with HEARING
18 

(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 øparagraphs (8)(E), (8)(F), and 

(10)(B) of¿ section 11(e) of the Federal Deposit Insurance Act, 

øparagraphs (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). 

SEC. 404. CLEARING ORGANIZATION NETTING. 

(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, øparagraphs (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 terminated, liquidated, accelerated, and 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). 

* * * * * * * 

(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 øparagraphs (8)(E), 

(8)(F), and (10)(B) of¿ section 11(e) of the Federal Deposit Insurance Act, øparagraphs (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). 

* * * * * * * 

TITLE 11, UNITED STATES CODE 

* * * * * * * 

CHAPTER 1—GENERAL PROVISIONS 

* * * * * * * 

§ 101. Definitions 

In this title the following definitions shall apply: 

(1) * * * 

* * * * * * * 

(22) The term ‘‘financial institution’’ means—

(A) a Federal reserve bank, or an entity ø(domestic or 

foreign)¿ that is a commercial or savings bank, industrial 

savings bank, savings and loan association, trust company, 

federally-insured credit union, or receiver, liquidating 

agent, or conservator for such entity and, when any such 

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vator or entity is acting as agent or custodian for a customer (whether or not a ‘‘customer’’, as defined in section 

741) in connection with a securities contract (as defined in 

section 741) such customer; or 

* * * * * * * 

(22A) The term ‘‘financial participant’’ means— (A) an entity that, at the time it enters into a securities 

contract, commodity contract, swap agreement, repurchase 

agreement, or forward contract, or at the time of the date 

of the filing of the petition, has one or more agreements 

or transactions described in paragraph (1), (2), (3), (4), (5), 

or (6) of section 561(a) with the debtor or any other entity 

(other than an affiliate) of a total gross dollar value of not 

less than $1,000,000,000 in notional or actual principal 

amount outstanding øon any day during the previous 15- 

month period¿(aggregated across counterparties) at such 

time or on any day during the 15-month period preceding 

the date of the filing of the petition, or has gross mark-to- market positions of not less than $100,000,000 (aggregated 

across counterparties) in one or more such agreements or 

transactions with the debtor or any other entity (other 

than an affiliate) øon any day during the previous 15- 

month period¿ at such time or on any day during the 15- 

month period preceding the date of the filing of the petition; 

or 

* * * * * * * 

(25) The term ‘‘forward contract’’ means— (A) a contract (other than a commodity contract, as defined in section 761) for the purchase, sale, or transfer of 

a commodity, as defined in section 761(8) of this title, or 

any similar good, article, service, right, or interest which 

is presently or in the future becomes the subject of dealing 

in the forward contract trade, or product or byproduct 

thereof, with a maturity date more than two days after the 

date the contract is entered into, including, but not limited 

to, a ørepurchase transaction, reverse repurchase transaction,¿ repurchase or reverse repurchase transaction 

(whether or not such repurchase or reverse repurchase 

transaction is a ‘‘repurchase agreement’’, as defined in this 

section) consignment, lease, swap, hedge transaction, deposit, loan, option, allocated transaction, unallocated transaction, or any other similar agreement; 

* * * * * * * 

(53B) The term ‘‘swap agreement’’—

(A) means—

(i) any agreement, including the terms and conditions incorporated by reference in such agreement, 

which is—

(I) * * * 

* * * * * * * 

(II) a spot, same day-tomorrow, tomorrow-next, 

forward, or other foreign exchange øor precious 


PWALKER on PRODPC60 with HEARING
20 

metals¿, precious metals, or other commodity 

agreement; 

* * * * * * * 

(VII) a commodity index or a commodity swap, 

option, future, or forward agreement; øor¿ 

(VIII) a weather swap, øweather derivative, or 

weather option¿ option, future, or forward agreement; 

(IX) an emissions swap, option, future, or forward agreement; or 

(X) an inflation swap, option, future, or forward 

agreement; 

(ii) any agreement or transaction that is similar to 

any other agreement or transaction referred to in this 

paragraph and that— (I) is of a type that has been, is presently, or in 

the future becomes, the subject of recurrent dealings in the swap or other derivatives markets (including terms and conditions incorporated by reference therein); and 

(II) is a forward, swap, øfuture, or option¿ future, option, or spot transaction on one or more 

rates, currencies, commodities, equity securities, 

or other equity instruments, debt securities or 

other debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, 

commercial, or economic consequence, or economic 

or financial indices or measures of economic or financial risk or value; 

* * * * * * * 

(B) is applicable for purposes of this title only, and shall 

not be construed or applied so as to challenge or affect the 

characterization, definition, or treatment of any swap 

agreement under any other statute, regulation, or rule, including øthe Securities Act of 1933, the Securities Exchange Act of 1934, the Public Utility Holding Company 

Act of 1935, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act 

of 1940, the Securities Investor Protection Act of 1970, the 

Commodity Exchange Act, the Gramm-Leach-Bliley Act, 

and the Legal Certainty for Bank Products Act of 2000¿ 

the Gramm-Leach-Bliley Act, the Legal Certainty for Bank 

Products Act of 2000, the securities laws (as such term is 

defined in section 3(a)(47) of the Securities Exchange Act of 

1934) and the Commodity Exchange Act. 

* * * * * * * 

CHAPTER 3—CASE ADMINISTRATION 

* * * * * * * 

SUBCHAPTER II—OFFICERS 

* * * * * * * 


PWALKER on PRODPC60 with HEARING
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§ 330. Compensation of officers 

(a) * * * 

(b)ø(1)¿ There shall be paid from the filing fee in a case under 

chapter 7 of this title ø$45¿ $100 to the trustee serving in such 

case, after such trustee’s services are rendered. 

ø(2) The Judicial Conference of the United States—

ø(A) shall prescribe additional fees of the same kind as prescribed under section 1914(b) of title 28; and 

ø(B) may prescribe notice of appearance fees and fees 

charged against distributions in cases under this title; 

to pay $15 to trustees serving in cases after such trustees’ services 

are rendered. Beginning 1 year after the date of the enactment of 

the Bankruptcy Reform Act of 1994, such $15 shall be paid in addition to the amount paid under paragraph (1).¿ 

* * * * * * * 

SUBCHAPTER IV—ADMINISTRATIVE POWERS 

* * * * * * * 

§ 362. Automatic stay 

(a) * * * 

(b) The filing of a petition under section 301, 302, or 303 of this 

title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay—

(1) * * * 

* * * * * * * 

ø(6) under subsection (a) of this section, of the setoff by a 

commodity broker, forward contract merchant, stockbroker, financial institution, financial participant, or securities clearing 

agency of any mutual debt and claim under or in connection 

with commodity contracts, as defined in section 761 of this 

title, forward contracts, or securities contracts, as defined in 

section 741 of this title, that constitutes the setoff of a claim 

against the debtor for a margin payment, as defined in section 

101, 741, or 761 of this title, or settlement payment, as defined 

in section 101 or 741 of this title, arising out of commodity contracts, forward contracts, or securities contracts against cash, 

securities, or other property held by, pledged to, under the control of, or due from such commodity broker, forward contract 

merchant, stockbroker, financial institution, financial participant, or securities clearing agency to margin, guarantee, secure, or settle commodity contracts, forward contracts, or securities contracts; 

ø(7) under subsection (a) of this section, of the setoff by a 

repo participant or financial participant, of any mutual debt 

and claim under or in connection with repurchase agreements 

that constitutes the setoff of a claim against the debtor for a 

margin payment, as defined in section 741 or 761 of this title, 

or settlement payment, as defined in section 741 of this title, 

arising out of repurchase agreements against cash, securities, 

or other property held by, pledged to, under the control of, or 

due from such repo participant or financial participant to margin, guarantee, secure or settle repurchase agreements;¿ 


PWALKER on PRODPC60 with HEARING
22 

(6) under subsection (a) of this section, of the exercise by a 

commodity broker, forward contract merchant, stockbroker, financial institution, financial participant, or securities clearing 

agency of any contractual right (as defined in section 555 or 

556) under any security agreement or arrangement or other 

credit enhancement forming a part of or related to any commodity contract, forward contract or securities contract, or of 

any contractual right (as defined in section 555 or 556) to offset 

or net out any termination value, payment amount, or other 

transfer obligation arising under or in connection with 1 or 

more such contracts, including any master agreement for such 

contracts; 

(7) under subsection (a) of this section, of the exercise by a 

repo participant or financial participant of any contractual 

right (as defined in section 559) under any security agreement 

or arrangement or other credit enhancement forming a part of 

or related to any repurchase agreement, or of any contractual 

right (as defined in section 559) to offset or net out any termination value, payment amount, or other transfer obligation 

arising under or in connection with 1 or more such agreements, 

including any master agreement for such agreements; 

* * * * * * * 

ø(17) under subsection (a), of the setoff by a swap participant 

or financial participant of a mutual debt and claim under or 

in connection with one or more swap agreements that constitutes the setoff of a claim against the debtor for any payment or other transfer of property due from the debtor under 

or in connection with any swap agreement against any payment due to the debtor from the swap participant or financial 

participant under or in connection with any swap agreement or 

against cash, securities, or other property held by, pledged to, 

under the control of, or due from such swap participant or financial participant to margin, guarantee, secure, or settle any 

swap agreement;¿ 

(17) under subsection (a) of this section, of the exercise by a 

swap participant or financial participant of any contractual 

right (as defined in section 560) under any security agreement 

or arrangement or other credit enhancement forming a part of 

or related to any swap agreement, or of any contractual right 

(as defined in section 560) to offset or net out any termination 

value, payment amount, or other transfer obligation arising 

under or in connection with 1 or more such agreements, including any master agreement for such agreements; 

* * * * * * * 

ø(27) under subsection (a), of the setoff by a master netting 

agreement participant of a mutual debt and claim under or in 

connection with one or more master netting agreements or any 

contract or agreement subject to such agreements that constitutes the setoff of a claim against the debtor for any payment or other transfer of property due from the debtor under 

or in connection with such agreements or any contract or 

agreement subject to such agreements against any payment 

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PWALKER on PRODPC60 with HEARING
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tract or agreement subject to such agreements or against cash, 

securities, or other property held by, pledged to, under the control of, or due from such master netting agreement participant 

to margin, guarantee, secure, or settle such agreements or any 

contract or agreement subject to such agreements, to the extent that such participant is eligible to exercise such offset 

rights under paragraph (6), (7), or (17) for each individual contract covered by the master netting agreement in issue; and¿ 

(27) under subsection (a) of this section, of the exercise by a 

master netting agreement participant of any contractual right 

(as defined in section 555, 556, 559, or 560) under any security 

agreement or arrangement or other credit enhancement forming 

a part of or related to any master netting agreement, or of any 

contractual right (as defined in section 555, 556, 559, or 560) 

to offset or net out any termination value, payment amount, or 

other transfer obligation arising under or in connection with 1 

or more such master netting agreements to the extent that such 

participant is eligible to exercise such rights under paragraph 

(6), (7), or (17) for each individual contract covered by the master netting agreement in issue; and 

* * * * * * * 

CHAPTER 5—CREDITORS, THE DEBTOR, AND THE 

ESTATE 

SUBCHAPTER III—THE ESTATE 

* * * * * * * 

§ 546. Limitations on avoiding powers 

(a) * * * 

* * * * * * * 

(e) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 

548(b) of this title, the trustee may not avoid a transfer that is a 

margin payment, as defined in section 101, 741, or 761 of this title, 

or settlement payment, as defined in section 101 or 741 of this 

title, made by or to (or for the benefit of) a commodity broker, forward contract merchant, stockbroker, financial institution, financial participant, or securities clearing agency, or that is a transfer 

made by or to (or for the benefit of) a commodity broker, forward 

contract merchant, stockbroker, financial institution, financial participant, or securities clearing agency, in connection with a securities contract, as defined in section 741(7), commodity contract, as 

defined in section 761(4), or forward contract, that is made before 

the commencement of the case, except under section 548(a)(1)(A) of 

this title. 

(f) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 

548(b) of this title, the trustee may not avoid a transfer øthat is 

a margin payment, as defined in section 741 or 761 of this title, 

or settlement payment, as defined in section 741 of this title,¿ 

made by or to (or for the benefit of) a repo participant or financial 

participant, in connection with a repurchase agreement and that is 

made before the commencement of the case, except under section 

548(a)(1)(A) of this title. 


PWALKER on PRODPC60 with HEARING
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(g) Notwithstanding sections 544, 545, 547, 548(a)(1)(B) and 

548(b) of this title, the trustee may not avoid a transfer, made by 

or to (or for the benefit of) a swap participant or financial participant, under or in connection with any swap agreement and that is 

made before the commencement of the case, except under section 

548(a)(1)(A) of this title. 

* * * * * * * 

(j) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 

548(b) the trustee may not avoid a transfer made by or to (or for 

the benefit of) a master netting agreement participant under or in 

connection with any master netting agreement or any individual 

contract covered thereby that is made before the commencement of 

the case, except under section 548(a)(1)(A) and except to the extent 

that the trustee could otherwise avoid such a transfer made under 

an individual contract covered by such master netting agreement. 

* * * * * * * 

CHAPTER 7—LIQUIDATION 

* * * * * * * 

SUBCHAPTER III—STOCKBROKER LIQUIDATION 

§ 741. Definitions for this subchapter 

In this subchapter— (1) * * * 

* * * * * * * 

(7) ‘‘securities contract’’—

(A) means— (i) a contract for the purchase, sale, or loan of a security, a certificate of deposit, a ømortgage loan or¿ 

mortgage loan, any interest in a mortgage loan, a 

group or index of securities, certificates of deposit, or 

mortgage loans or interests therein (including an interest therein or based on the value thereof), or option 

on any of the foregoing, including an option to purchase or sell any such security, certificate of deposit, 

mortgage loan, interest, group or index, or option, and 

including any repurchase or reverse repurchase transaction on any such security, certificate of deposit, 

mortgage loan, interest, group or index, or option 

(whether or not such repurchase or reverse repurchase 

transaction is a ‘‘repurchase agreement’’, as defined in 

section 101); 

* * * * * * * 

(iii) the guarantee (including by novation) by or to 

any securities clearing agency of a settlement of cash, 

securities, certificates of deposit, mortgage loans or interests therein, group or index of securities, or mortgage loans or interests therein (including any interest 

therein or based on the value thereof), or option on 

any of the foregoing, including an option to purchase 

or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether 


PWALKER on PRODPC60 with HEARING
25 

or not such settlement is in connection with any agreement or transaction referred to in clauses (i) through 

(xi)); 

* * * * * * * 

(v) any extension of credit for the clearance or settlement of securities transactions; 

(vi) any loan transaction coupled with a securities 

collar transaction, any prepaid forward securities 

transaction, or any total return swap transaction coupled with a securities sale transaction; 

ø(v)¿ (vii) any other agreement or transaction that is 

similar to an agreement or transaction referred to in 

this subparagraph; 

ø(vi)¿ (vvv) any combination of the agreements or 

transactions referred to in this subparagraph; 

ø(vii)¿ (ix) any option to enter into any agreement or 

transaction referred to in this subparagraph; 

ø(viii)¿ (x) a master agreement that provides for an 

agreement or transaction referred to in clause (i), (ii), 

(iii), (iv), (v), (vi), øor (vii)¿ (vii), (viii), or (ix), together 

with all supplements to any such master agreement, 

without regard to whether the master agreement provides for an agreement or transaction that is not a securities contract under this subparagraph, except that 

such master agreement shall be considered to be a securities contract under this subparagraph only with 

respect to each agreement or transaction under such 

master agreement that is referred to in clause (i), (ii), 

(iii), (iv), (v), (vi), øor (vii)¿ (vii), (viii), or (ix); or 

ø(ix)¿ (xi) any security agreement or arrangement or 

other credit enhancement related to any agreement or 

transaction referred to in this subparagraph, including 

any guarantee or reimbursement obligation by or to a 

stockbroker, securities clearing agency, financial institution, or financial participant in connection with any 

agreement or transaction referred to in this subparagraph, but not to exceed the damages in connection 

with any such agreement or transaction, measured in 

accordance with section 562; and 

* * * * * * * 

SECTION 5 OF THE SECURITIES INVESTOR PROTECTION 

ACT OF 1970 

SEC. 5. PROTECTION OF CUSTOMERS. 

(a) * * * 

(b) COURT ACTION.— (1) * * * 

(2) JURISDICTION AND POWERS OF COURT.— (A) * * * 

* * * * * * * 

(C) EXCEPTION FROM STAY.—


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(i) * * * 

* * * * * * * 

(iii) As used in this subparagraph, the term ‘‘contractual right’’ includes a right set forth in a rule or 

bylaw of a derivatives clearing organization (as defined 

in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a national securities association, øor a securities clearing agency, a right set 

forth in a bylaw of a clearing organization or contract 

market¿ a securities clearing agency, a contract market 

designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under 

the Commodity Exchange Act, or a board of trade (as 

defined in the Commodity Exchange Act), or in a resolution of the governing board thereof, and a right, 

whether or not in writing, arising under common law, 

under law merchant, or by reason of normal business 

practice. 

* * * * * * * 

BANKRUPTCY ABUSE PREVENTION AND CONSUMER 

PROTECTION ACT OF 2005 

* * * * * * * 

TITLE IX—FINANCIAL CONTRACT 

PROVISIONS 

* * * * * * * 

SEC. 912. SAVINGS CLAUSE. 

The meanings of terms used in this title are applicable for the 

purposes of this title only, and shall not be construed or applied so 

as to challenge or affect the characterization, definition, or treatment of any similar terms under any other statute, regulation, or 

rule, including the Gramm-Leach-Bliley Act, the Legal Certainty for 

Bank Products Act of 2000, the securities laws (as such term is defined in section 3(a)(47) of the Securities Exchange Act of 1934), and 

the Commodity Exchange Act. 

* * * * * * * 

TITLE 28, UNITED STATES CODE 

* * * * * * * 

PART II—DEPARTMENT OF JUSTICE 

* * * * * * * 


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27 

CHAPTER 39—UNITED STATES TRUSTEES 

* * * * * * * 

§ 589a. United States trustee system fund 

(a) * * * 

(b) For the purpose of recovering the cost of services of the 

United States Trustee System, there shall be deposited as offsetting collections to the appropriation ‘‘United States Trustee System 

Fund’’, to remain available until expended, the following— (1)(A) ø40.46¿ 29.67 percent of the fees collected under section 1930(a)(1)(A); and 

* * * * * * * 

PART V—PROCEDURE 

* * * * * * * 

CHAPTER 123—FEES AND COSTS 

* * * * * * * 

§ 1930. Bankruptcy fees 

(a) The parties commencing a case under title 11 shall pay to the 

clerk of the district court or the clerk of the bankruptcy court, if 

one has been certified pursuant to section 156(b) of this title, the 

following filing fees: 

(1) For a case commenced under—

(A) chapter 7 of title 11, ø$245¿ $300; and 

* * * * * * * 

SECTION 406 OF THE JUDICIARY APPROPRIATIONS ACT, 

1990 

SEC. 406. (a) * * * 

(b) All fees as shall be hereafter collected for any service not of 

a kind described in any of the items enumerated as items 1 

through 7 and as items 9 through 18, as in effect on November 21, 

1989, of the bankruptcy miscellaneous fee schedule prescribed by 

the Judicial Conference of the United States under section 1930(b) 

of title 28, United States Code, ø28.87¿ 21.17 percent of the fees 

collected under section 1930(a)(1)(A) of that title, 35.00 percent of 

the fees collected under section 1930(a)(1)(B) of that title, and 25 

percent of the fees collected under section 1930(a)(3) of that title 

shall be deposited as offsetting receipts to the fund established 

under section 1931 of that title and shall remain available to the 

Judiciary until expended to reimburse any appropriation for the 

amount paid out of such appropriation for expenses of the Courts 

of Appeals, District Courts, and other Judicial Services and the Administrative Office of the United States Courts. The Judicial Conference shall report to the Committees on Appropriations of the 

House of Representatives and the Senate on a quarterly basis beVerDate Aug 31 2005 23:44 Sep 15, 2006 Jkt 049006 PO 00000 Frm 00027 Fmt 6659 Sfmt 6602 E:\HR\OC\HR648P1.XXX HR648P1

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ginning on the first day of each fiscal year regarding the sums deposited in said fund. 

* * * * * * * 

SECTION 10101 OF DEFICIT REDUCTION ACT OF 2005 

(Public Law 109–171) 

SEC. 10101. BANKRUPTCY FEES. 

(a) BANKRUPTCY FILING FEES.—Section 1930(a) of title 28, United 

States Code, is amended—

(1) * * * 

ø(2) in paragraph (2) by striking ‘‘$1,000’’ and inserting 

‘‘$2,750’’.¿ 

* * * * * * * 

Æ 


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