102 
362(b)(7), 362(b)(17), 362(b)(19), 555, 556, 559, 
560, or 561)’’; 
(2) in subsection (a)(3)(C), by inserting before 
the period the following: ‘‘(except for a setoff of a 
kind described in section 362(b)(6), 362(b)(7), 
362(b)(17), 362(b)(19), 555, 556, 559, 560, or 561 
of this title)’’; and 
(3) 
in 
subsection 
(b)(1), 
by 
striking 
‘‘362(b)(14),’’ 
and 
inserting 
‘‘362(b)(17), 
362(b)(19), 555, 556, 559, 560, 561,’’. 
(o) SECURITIES
CONTRACTS, COMMODITY
CON-
TRACTS, AND FORWARD CONTRACTS.—Title 11, United 
States Code, is amended— 
(1) in section 362(b)(6), by striking ‘‘financial 
institutions,’’ each place such term appears and in-
serting ‘‘financial institution, financial participant,’’; 
(2) in sections 362(b)(7) and 546(f), by insert-
ing ‘‘or financial participant’’ after ‘‘repo partici-
pant’’ each place such term appears; 
(3) in section 546(e), by inserting ‘‘financial 
participant,’’ after ‘‘financial institution,’’; 
(4) in section 548(d)(2)(B), by inserting ‘‘fi-
nancial participant,’’ after ‘‘financial institution,’’; 
(5) in section 548(d)(2)(C), by inserting ‘‘or fi-
nancial participant’’ after ‘‘repo participant’’;
103 
(6) in section 548(d)(2)(D), by inserting ‘‘or fi-
nancial participant’’ after ‘‘swap participant’’; 
(7) in section 555— 
(A) by inserting ‘‘financial participant,’’ 
after ‘‘financial institution,’’; and 
(B) by striking the second sentence and in-
serting the following: ‘‘As used in this section, 
the term ‘contractual right’ includes a right set 
forth in a rule or bylaw of a derivatives clearing 
organization (as defined in the Commodity Ex-
change Act), a multilateral clearing organiza-
tion (as defined in the Federal Deposit Insur-
ance Corporation Improvement Act of 1991), a 
national securities exchange, a national securi-
ties association, a securities clearing agency, a 
contract market designated under the Com-
modity Exchange Act, a derivatives transaction 
execution facility registered under the Com-
modity 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’’;
104 
(8) in section 556, by inserting ‘‘, financial par-
ticipant,’’ after ‘‘commodity broker’’; 
(9) in section 559, by inserting ‘‘or financial 
participant’’ after ‘‘repo participant’’ each place 
such term appears; and 
(10) in section 560, by inserting ‘‘or financial 
participant’’ after ‘‘swap participant’’. 
(p) CONFORMING AMENDMENTS.—Title 11, United 
States Code, is amended— 
(1) in the table of sections for chapter 5— 
(A) by amending the items relating to sec-
tions 555 and 556 to read as follows: 
‘‘555. Contractual right to liquidate, terminate, or accelerate a securities con-
tract. 
‘‘556. Contractual right to liquidate, terminate, or accelerate a commodities con-
tract or forward contract.’’; 
and 
(B) by amending the items relating to sec-
tions 559 and 560 to read as follows: 
‘‘559. Contractual right to liquidate, terminate, or accelerate a repurchase 
agreement. 
‘‘560. Contractual right to liquidate, terminate, or accelerate a swap agree-
ment.’’; 
and 
(2) in the table of sections for chapter 7— 
(A) by inserting after the item relating to 
section 766 the following: 
‘‘767. Commodity broker liquidation and forward contract merchants, com-
modity brokers, stockbrokers, financial institutions, financial 
participants, securities clearing agencies, swap participants, 
repo participants, and master netting agreement participants.’’;
105 
and 
(B) by inserting after the item relating to 
section 752 the following: 
‘‘753. Stockbroker liquidation and forward contract merchants, commodity bro-
kers, stockbrokers, financial institutions, financial participants, 
securities clearing agencies, swap participants, repo partici-
pants, and master netting agreement participants.’’. 
SEC. 9. RECORDKEEPING REQUIREMENTS. 
(a) FDIC-INSURED DEPOSITORY INSTITUTIONS.— 
Section 11(e)(8) of the Federal Deposit Insurance Act (12 
U.S.C. 1821(e)(8)) is amended by adding at the end the 
following new subparagraph: 
‘‘(H) RECORDKEEPING REQUIREMENTS.— 
The Corporation, in consultation with the ap-
propriate Federal banking agencies and the Na-
tional Credit Union Administration Board, may 
prescribe regulations requiring more detailed 
recordkeeping by any insured depository institu-
tion with respect to qualified financial contracts 
(including market valuations) only if such in-
sured depository institution is in a troubled 
condition (as such term is defined by the Cor-
poration pursuant to section 32).’’. 
(b) INSURED CREDIT UNIONS.—Section 207(c)(8) of 
the Federal Credit Union Act (12 U.S.C. 1787(c)(8)) is 
amended by adding at the end the following new subpara-
graph:
106 
‘‘(H) RECORDKEEPING REQUIREMENTS.— 
The Board, in consultation with the appropriate 
Federal banking agencies, may prescribe regula-
tions requiring more detailed recordkeeping by 
any insured credit union with respect to quali-
fied financial contracts (including market valu-
ations) only if such insured credit union is in 
a troubled condition (as such term is defined by 
the Board pursuant to section 212).’’. 
SEC. 10. EXEMPTIONS FROM CONTEMPORANEOUS EXECU-
TION REQUIREMENT. 
Section 13(e)(2) of the Federal Deposit Insurance 
Act (12 U.S.C. 1823(e)(2)) is amended to read as follows: 
‘‘(2) EXEMPTIONS
FROM
CONTEMPORANEOUS 
EXECUTION REQUIREMENT.—An agreement to pro-
vide for the lawful collateralization of— 
‘‘(A) deposits of, or other credit extension 
by, a Federal, State, or local governmental enti-
ty, or of any depositor referred to in section 
11(a)(2), including an agreement to provide col-
lateral in lieu of a surety bond; 
‘‘(B) bankruptcy estate funds pursuant to 
section 345(b)(2) of title 11, United States 
Code;
107 
‘‘(C) extensions of credit, including any 
overdraft, from a Federal reserve bank or Fed-
eral home loan bank; or 
‘‘(D) one or more qualified financial con-
tracts, as defined in section 11(e)(8)(D), 
shall not be deemed invalid pursuant to paragraph 
(1)(B) solely because such agreement was not exe-
cuted contemporaneously with the acquisition of the 
collateral or because of pledges, delivery, or substi-
tution of the collateral made in accordance with such 
agreement.’’. 
SEC. 11. DAMAGE MEASURE. 
(a) IN GENERAL.—Title 11, United States Code, is 
amended— 
(1) by inserting after section 561, as added by 
section 8(k) of this Act, the following: 
‘‘§ 562. Timing of damage measurement in connection 
with swap agreements, securities con-
tracts, forward contracts, commodity con-
tracts, repurchase agreements, and mas-
ter netting agreements 
‘‘(a) If the trustee rejects a swap agreement, securi-
ties contract (as defined in section 741), forward contract, 
commodity contract (as defined in section 761), repur-
chase agreement, or master netting agreement pursuant
109 
pant, financial participant, master netting agree-
ment participant, or swap participant; or 
‘‘(2) the forward contract merchant, stock-
broker, financial institution, securities clearing agen-
cy, repo participant, financial participant, master 
netting agreement participant, or swap participant, 
in the case of an objection by the trustee, 
has the burden of proving that there were no commercially 
reasonable determinants of value as of such date or 
dates.’’; and 
(2) in the table of sections for chapter 5, by in-
serting after the item relating to section 561 (as 
added by section 8(k)(2) of this Act) the following 
new item: 
‘‘562. Timing of damage measure in connection with swap agreements, securities 
contracts, forward contracts, commodity contracts, repurchase 
agreements, or master netting agreements.’’. 
(b) CLAIMS ARISING FROM REJECTION.—Section 
502(g) of title 11, United States Code, is amended— 
(1) by inserting ‘‘(1)’’ after ‘‘(g)’’; and 
(2) by adding at the end the following: 
‘‘(2) A claim for damages calculated in accordance 
with section 562 of this title shall be allowed under sub-
section (a), (b), or (c), or disallowed under subsection (d) 
or (e), as if such claim had arisen before the date of the 
filing of the petition.’’.
110 
SEC. 12. SIPC STAY. 
Section 5(b)(2) of the Securities Investor Protection 
Act of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding 
at the end the following new subparagraph: 
‘‘(C) EXCEPTION FROM STAY.— 
‘‘(i) Notwithstanding section 362 of 
title 11, United States Code, neither the 
filing of an application under subsection 
(a)(3) nor any order or decree obtained by 
SIPC from the court shall operate as a 
stay of any contractual rights of a creditor 
to liquidate, terminate, or accelerate a se-
curities contract, commodity contract, for-
ward contract, repurchase agreement, swap 
agreement, or master netting agreement, 
as those terms are defined in sections 101, 
741, and 761 of title 11, United States 
Code, to offset or net termination values, 
payment amounts, or other transfer obliga-
tions arising under or in connection with 
one or more of such contracts or agree-
ments, or to foreclose on any cash collat-
eral pledged by the debtor, whether or not 
with respect to one or more of such con-
tracts or agreements.
111 
‘‘(ii) Notwithstanding clause (i), such 
application, order, or decree may operate 
as a stay of the foreclosure on, or disposi-
tion of, securities collateral pledged by the 
debtor, whether or not with respect to one 
or more of such contracts or agreements, 
securities sold by the debtor under a repur-
chase agreement, or securities lent under a 
securities lending agreement. 
‘‘(iii) As used in this subparagraph, 
the term ‘contractual right’ includes a 
right set forth in a rule or bylaw of a na-
tional securities exchange, a national secu-
rities association, or a securities clearing 
agency, a right set forth in a bylaw of a 
clearing organization or contract market 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 busi-
ness practice.’’. 
SEC. 
13. 
APPLICABILITY 
OF 
OTHER 
SECTIONS 
TO 
CHAPTER 9. 
Section 901(a) of title 11, United States Code, is 
amended—
112 
(1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and 
(2) by inserting ‘‘559, 560, 561, 562’’ after 
‘‘557,’’. 
SEC. 14. EFFECTIVE DATE; APPLICATION OF AMENDMENTS. 
(a) EFFECTIVE DATE.—This Act shall take effect on 
the date of enactment of this Act. 
(b) APPLICATION OF AMENDMENTS.—The amend-
ments made by this Act shall apply with respect to cases 
commenced or appointments made under any Federal or 
State law on or after the date of enactment of this Act, 
but shall not apply with respect to cases commenced or 
appointments made under any Federal or State law before 
the date of enactment of this Act. 
SEC. 15. SAVINGS CLAUSE. 
The meanings of terms used in this Act are applicable 
for purposes of this Act 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 that term is defined 
in section 3(a)(47) of the Securities Exchange Act of 
1934), and the Commodity Exchange Act.
Union Calendar No. 297 
108TH CONGRESS 
2D SESSION 
H. R. 2120 
[Report No. 108–277, Part I] 
A BILL 
To revise the banking and bankruptcy insolvency 
laws with respect to the termination and netting 
of financial contracts, and for other purposes. 
JUNE 1, 2004 
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