H. R. 5585
One Hundred Ninth Congress
of the
United States of America 
AT THE SECOND SESSION 
Begun and held at the City of Washington on Tuesday, 
the third day of January, two thousand and six 
An Act 
To improve the netting process for financial contracts, and for other purposes.
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Financial Netting Improvements 
Act of 2006’’. 
SEC. 2. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS 
OR RECEIVERS OF DEPOSITORY INSTITUTIONS. 
(a) DEFINITION OF SECURITIES CONTRACT.—
(1) 
FDIC-INSURED
DEPOSITORY
INSTITUTIONS.—Section 
11(e)(8)(D)(ii) of the Federal Deposit 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 reverse repurchase trans-
action is a ‘repurchase agreement’, as defined in clause 
(v))’’; 
(B) in subclause (IV)—
(i) by inserting ‘‘(including by novation)’’ after ‘‘the 
guarantee’’; and 
(ii) by inserting before the semicolon ‘‘(whether 
or not such settlement is in connection with any agree-
ment 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 inserting ‘‘(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 transaction coupled 
with a securities collar transaction, any prepaid 
securities forward transaction, or any total return 
swap transaction coupled with a securities sale 
transaction;’’.
H. R. 5585—2
(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 reverse repurchase trans-
action is a ‘repurchase agreement’, as defined in clause 
(v))’’; 
(B) in subclause (IV)—
(i) by inserting ‘‘(including by novation)’’ after ‘‘the 
guarantee’’; and 
(ii) by inserting before the semicolon ‘‘(whether 
or not such settlement is in connection with any agree-
ment 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 inserting ‘‘(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 transaction coupled 
with a securities collar transaction, any prepaid 
securities forward transaction, or any total return 
swap transaction coupled with a securities sale 
transaction;’’. 
(b) DEFINITION OF FORWARD CONTRACT.—
(1) 
FDIC-INSURED
DEPOSITORY
INSTITUTIONS.—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 ‘‘transaction, 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 striking ‘‘transaction, reverse repurchase trans-
action’’ and inserting ‘‘or reverse repurchase transaction 
(whether or not such repurchase or reverse repurchase trans-
action is a ‘repurchase agreement’, as defined in clause (v))’’. 
(c) DEFINITION OF SWAP AGREEMENT.—
(1) 
FDIC-INSURED
DEPOSITORY
INSTITUTIONS.—Section 
11(e)(8)(D)(vi) of the Federal Deposit 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 deriva-
tive, or weather option’’ and inserting ‘‘weather swap, 
option, future, or forward agreement; an emissions 
swap, option, future, or forward agreement; or an infla-
tion swap, option, future, or forward agreement’’;
H. R. 5585—3
(B) in subclause (II)—
(i) by inserting ‘‘or other derivatives’’ after 
‘‘dealings in the swap’’; and 
(ii) by striking ‘‘future, or option’’ and inserting 
‘‘future, option, or spot transaction’’; and 
(C) by striking ‘‘the Securities Act of 1933, the Securi-
ties Exchange Act of 1934, the Public Utility Holding Com-
pany 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’’ and inserting ‘‘the Gramm-Leach-Bliley Act, the 
Legal Certainty for Bank Products Act of 2000, the securi-
ties laws (as such term is defined in section 3(a)(47) of 
the Securities Exchange Act of 1934) and the Commodity 
Exchange 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 
(ii) by striking ‘‘or a weather swap, weather deriva-
tive, or weather option’’ and inserting ‘‘weather swap, 
option, future, or forward agreement; an emissions 
swap, option, future, or forward agreement; or an infla-
tion swap, option, future, or forward agreement’’; 
(B) in subclause (II)—
(i) by inserting ‘‘or other derivatives’’ after 
‘‘dealings in the swap’’; and 
(ii) by striking ‘‘future, or option’’ and inserting 
‘‘future, option, or spot transaction’’; and 
(C) by striking ‘‘the Securities Act of 1933, the Securi-
ties Exchange Act of 1934, the Public Utility Holding Com-
pany 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’’ and inserting ‘‘the Gramm-Leach-Bliley Act, the 
Legal Certainty for Bank Products Act of 2000, the securi-
ties laws (as such term is defined in section 3(a)(47) of 
the Securities Exchange Act of 1934) and the Commodity 
Exchange Act’’. 
SEC. 3. CLARIFYING AMENDMENTS RELATING TO DEFINITION OF PER-
SON. 
(a) FDIC-INSURED DEPOSITORY INSTITUTIONS DEFINITION
OF 
PERSON.—Section 11(e)(8)(D) of the Federal Deposit Insurance Act 
(12 U.S.C. 1821(e)(8)(D)) is amended by adding at the end the 
following: 
‘‘(ix) PERSON.—The term ‘person’ includes any govern-
mental entity in addition to any entity included in the 
definition of such term in section 1 of title 1, United States 
Code.’’.
H. R. 5585—4
(b) INSURED CREDIT UNIONS DEFINITION OF PERSON.—Section 
207(c)(8)(D) 
of 
the 
Federal 
Credit 
Union 
Act 
(12 
U.S.C. 
1787(c)(8)(D)) is amended by adding at the end the following: 
‘‘(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.’’. 
SEC. 4. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT 
ACT OF 1991. 
(a) ENFORCEABILITY OF BILATERAL NETTING CONTRACTS.—Sec-
tion 403 of the Federal Deposit Insurance Corporation Improvement 
Act of 1991 (12 U.S.C. 4403) is amended—
(1) in each of subsections (a) and (f), by striking ‘‘para-
graphs (8)(E), (8)(F), and (10)(B) of’’ each place such term 
appears; and 
(2) in subsection (a), by inserting ‘‘terminated, liquidated, 
accelerated, and’’ after ‘‘institutions shall be’’. 
(b) ENFORCEABILITY OF CLEARING ORGANIZATION NETTING CON-
TRACTS.—Section 404 of the Federal Deposit Insurance Corporation 
Improvement Act of 1991 (12 U.S.C. 4404) is amended—
(1) in each of subsections (a) and (h), by striking ‘‘para-
graphs (8)(E), (8)(F), and (10)(B) of’’ each place such term 
appears; and 
(2) in subsection (a), by inserting ‘‘terminated, liquidated, 
accelerated, and’’ after ‘‘organization shall be’’. 
SEC. 5. CONFORMING AMENDMENTS. 
(a) CLARIFYING DEFINITIONS.—Title 11, United States Code, 
is amended—
(1) in section 101—
(A) in paragraph (22)(A)—
(i) by striking ‘‘(domestic or foreign)’’ after ‘‘an 
entity’’; and 
(ii) by inserting ‘‘(whether or not a ‘customer’, as 
defined in section 741)’’ after ‘‘custodian for a cus-
tomer’’; 
(B) in paragraph (22A)—
(i) by striking ‘‘on any day during the previous 
15-month period’’ each place it appears and inserting 
‘‘at such time or on any day during the 15-month 
period preceding the date of the filing of the petition’’; 
and 
(ii) 
by 
inserting 
‘‘(aggregated 
across 
counterparties)’’ after ‘‘principal amount outstanding’’; 
(C) in paragraph (25)(A)—
(i) by inserting ‘‘, as defined in section 761’’ after 
‘‘commodity contract’’; and 
(ii) by striking ‘‘repurchase transaction, reverse 
repurchase transaction,’’ and inserting ‘‘repurchase or 
reverse repurchase transaction (whether or not such 
repurchase or reverse repurchase transaction is a 
‘repurchase agreement’, as defined in this section)’’; 
(D) in paragraph (53B)(A)—
(i) in clause (i)—
(I) in subclause (II), by striking ‘‘or precious 
metals’’ and inserting ‘‘, precious metals, or other 
commodity’’;
H. R. 5585—5
(II) in subclause (VII), by striking ‘‘or’’ at the 
end; 
(III) in subclause (VIII), by striking ‘‘weather 
derivative, or weather option’’ and inserting 
‘‘option, future, or forward agreement’’; and 
(IV) by adding at the end the following: 
‘‘(IX) an emissions swap, option, future, or for-
ward agreement; or 
‘‘(X) an inflation swap, option, future, or for-
ward agreement;’’; and 
(ii) in clause (ii)—
(I) in subclause (I), by inserting ‘‘or other 
derivatives’’ after ‘‘dealings in the swap’’; and 
(II) in subclause (II), by striking ‘‘future, or 
option’’ and inserting ‘‘future, option, or spot trans-
action’’; and 
(E) in paragraph (53B)(B), 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 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’’ and inserting ‘‘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’’; 
(2) in section 362(b)—
(A) by striking paragraphs (6) and (7) and inserting 
the following: 
‘‘(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 com-
modity 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 termi-
nation 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;’’; 
(B) by striking paragraph (17) and inserting the fol-
lowing: 
‘‘(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