IB 
Union Calendar No. 403 
109TH CONGRESS 
2D SESSION 
H. R. 5585 
[Report No. 109–648, Part I] 
To improve the netting process for financial contracts, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 12, 2006 
Mr. MCHENRY (for himself and Ms. WASSERMAN SCHULTZ) introduced the 
following bill; which was referred to the Committee on Financial Services, 
and in addition to the Committee on the Judiciary, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
of such provisions as fall within the jurisdiction of the committee con-
cerned 
SEPTEMBER 12, 2006 
Reported from the Committee on Financial Services 
SEPTEMBER 12, 2006 
Referral to the Committee on the Judiciary extended for a period ending not 
later than September 22, 2006 
SEPTEMBER 22, 2006 
The Committee on the Judiciary discharged; committed to the Committee of 
the Whole House on the State of the Union and ordered to be printed 
A BILL 
To improve the netting process for financial contracts, and 
for other purposes. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Financial Netting Im-
provements Act of 2006’’. 
SEC. 2. TREATMENT OF CERTAIN AGREEMENTS BY CON-
SERVATORS OR RECEIVERS OF DEPOSITORY 
INSTITUTIONS. 
(a) DEFINITION OF SECURITIES CONTRACT.— 
(1) 
FDIC-INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 11(e)(8)(D)(ii) of the Federal De-
posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(ii)) is 
amended— 
(A) in subclause (I)— 
(i) by striking ‘‘mortgage loan, or’’ 
and inserting ‘‘mortgage loan,’’; and 
(ii) by inserting before the semicolon 
‘‘(whether or not such repurchase or re-
verse repurchase transaction is a ‘repur-
chase agreement’, as defined in clause 
(v))’’; 
(B) in subclause (IV)— 
(i) by inserting ‘‘(including by nova-
tion)’’ after ‘‘the guarantee’’; and 
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(ii) by inserting before the semicolon 
‘‘(whether or not such settlement is in con-
nection with any agreement or transaction 
referred to in subclauses (I) through (XII) 
(other than subclause (II))’’; 
(C) in subclause (IX), by striking ‘‘or 
(VIII)’’ each place such term appears and in-
serting ‘‘(VIII), (IX), or (X)’’; 
(D) by redesignating subclauses (VI), 
(VII), (VIII), (IX), and (X) as subclauses 
(VIII), (IX), (X), (XI), and (XII), respectively; 
and 
(E) by inserting after subclause (V) the 
following new subparagraphs: 
‘‘(VI) means any extension of 
credit for the clearance or settlement 
of securities transactions; 
‘‘(VII) means any loan trans-
action coupled with a securities collar 
transaction, any prepaid securities 
forward transaction, or any total re-
turn swap transaction coupled with a 
securities sale transaction;’’. 
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(2) 
INSURED
CREDIT
UNIONS.—Section 
207(c)(8)(D)(ii) of the Federal Credit Union Act 
(12 U.S.C. 1787(c)(8)(D)(ii)) is amended— 
(A) in subclause (I)— 
(i) by striking ‘‘mortgage loan, or’’ 
and inserting ‘‘mortgage loan,’’; and 
(ii) by inserting before the semicolon 
‘‘(whether or not such repurchase or re-
verse repurchase transaction is a ‘repur-
chase agreement’, as defined in clause 
(v))’’; 
(B) in subclause (IV)— 
(i) by inserting ‘‘(including by nova-
tion)’’ after ‘‘the guarantee’’; and 
(ii) by inserting before the semicolon 
‘‘(whether or not such settlement is in con-
nection with any agreement or transaction 
referred to in subclauses (I) through (XII) 
(other than subclause (II))’’; 
(C) in subclause (IX), by striking ‘‘or 
(VIII)’’ each place such term appears and in-
serting ‘‘(VIII), (IX), or (X)’’; 
(D) by redesignating subclauses (VI), 
(VII), (VIII), (IX), and (X) as subclauses 
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(VIII), (IX), (X), (XI), and (XII), respectively; 
and 
(E) by inserting after subclause (V) the 
following new subparagraphs: 
‘‘(VI) means any extension of 
credit for the clearance or settlement 
of securities transactions; 
‘‘(VII) means any loan trans-
action coupled with a securities collar 
transaction, any prepaid securities 
forward transaction, or any total re-
turn swap transaction coupled with a 
securities sale transaction;’’. 
(b) DEFINITION OF FORWARD CONTRACT.— 
(1) 
FDIC-INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 11(e)(8)(D)(iv)(I) of the Federal 
Deposit 
Insurance 
Act 
(12 
U.S.C. 
1821(e)(8)(D)(iv)(I)) is amended by striking ‘‘trans-
action, reverse repurchase transaction’’ and inserting 
‘‘or reverse repurchase transaction (whether or not 
such repurchase or reverse repurchase transaction is 
a ‘repurchase agreement’, as defined in clause (v))’’. 
(2) 
INSURED
CREDIT
UNIONS.—Section 
207(c)(8)(D)(iv)(I) of the Federal Credit Union Act 
(12 U.S.C. 1787(c)(8)(D)(iv)(I)) is amended by 
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striking ‘‘transaction, reverse repurchase trans-
action’’ and inserting ‘‘or reverse repurchase trans-
action (whether or not such repurchase or reverse 
repurchase transaction is a ‘repurchase agreement’, 
as defined in clause (v))’’. 
(c) DEFINITION OF SWAP AGREEMENT.— 
(1) 
FDIC-INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 11(e)(8)(D)(vi) of the Federal De-
posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(vi)) is 
amended— 
(A) in subclause (I)— 
(i) by striking ‘‘or precious metals’’ 
and inserting ‘‘, precious metals, or other 
commodity’’; and 
(ii) by striking ‘‘or a weather swap, 
weather derivative, or weather option’’ and 
inserting ‘‘weather swap, option, future, or 
forward agreement; an emissions swap, op-
tion, future, or forward agreement; or an 
inflation swap, option, future, or forward 
agreement’’; 
(B) in subclause (II)— 
(i) by inserting ‘‘or other derivatives’’ 
after ‘‘dealings in the swap’’; and 
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(ii) by striking ‘‘future, or option’’ 
and inserting ‘‘future, option, or spot 
transaction’’; and 
(C) by striking ‘‘the 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 Invest-
ment Company Act of 1940, the Investment 
Advisers Act of 1940, the Securities Investor 
Protection Act of 1970, the Commodity Ex-
change Act, the Gramm-Leach-Bliley Act, and 
the Legal Certainty for Bank Products Act of 
2000’’ and inserting ‘‘the Gramm-Leach-Bliley 
Act, the Legal Certainty for Bank Products Act 
of 2000, the securities laws (as such term is de-
fined in section 3(a)(47) of the Securities Ex-
change Act of 1934) and the Commodity Ex-
change Act’’. 
(2) 
INSURED
CREDIT
UNIONS.—Section 
207(c)(8)(D)(vi) of the Federal Credit Union Act 
(12 U.S.C. 1787(c)(8)(D)(vi)) is amended— 
(A) in subclause (I)— 
(i) by striking ‘‘or precious metals’’ 
and inserting ‘‘, precious metals, or other 
commodity’’; and 
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