The statutes are, of course, much more intricate than this brief description. While these laws provide significant assurances that the risk reduction benefits of close-out netting are available under U.S. law, the provisions of Title X are an important step toward harmonizing these statutory provisions which were enacted over more than a decade. In addition, Title X permits our statutes to remain abreast of innovations that have occurred in our financial markets since 1989. As a result, enactment of Title X is a crucial step to maintaining the U.S. as the leader in financial innovation and risk management. Provisions of Title X Title X addresses several significant issues for bank receiverships, while providing additional clarification and consistency that reduces systemic risk in all insolvencies.
Title X includes three principal elements.
First, the legislation strengthens the statutory protections for netting of financial market contracts. It revises and clarifies the definitions of the types of contracts that benefit from netting in line with market innovations and practice. This provides additional certainty to market participants and improves their ability to accurately assess and manage risks. The legislation also clarifies that, under the FDI Act and the Bankruptcy Code, cross-product netting can be achieved through the use of a master netting contract. Second, the proposed legislation makes the treatment of financial market contracts more consistent under the FDI Act and the Bankruptcy Code.