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U.S. Code/Title 12/§ 4404

Title 12

12

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12 U.S.C. § 4404.Chapter 45

§ 4404

Clearing organization netting

Title 12
3 min read
Subchapter: BILATERAL AND CLEARING ORGANIZATION NETTING

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((a)) ** General rule** Notwithstanding any other provision of State or Federal law (other than , , and any order authorized under ), 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 1821(e) of this titlesection 1787(c) of this titlesection 78eee(b)(2) of title 15section 561(b)(2) of title 11

((b)) ** Limitation of obligation to make payment** The only obligation, if any, of a member of a clearing organization to make payment with respect to covered contractual payment obligations arising under a single netting contract to any other member of a clearing organization shall be equal to its net obligation arising under that netting contract, and no such obligation shall exist if there is no net obligation.

((c)) ** Limitation on right to receive payment** The only right, if any, of a member of a clearing organization to receive payment with respect to a covered contractual payment entitlement arising under a single netting contract from other members of a clearing organization shall be equal to its net entitlement arising under that netting contract, and no such right shall exist if there is no net entitlement.

((d)) ** Entitlement of failed members** The net entitlement, if any, of any failed member of a clearing organization shall be paid to the failed member in accordance with, and subject to the conditions of, the applicable netting contract.

((e)) ** Obligations of failed members** The net obligation, if any, of any failed member of a clearing organization shall be determined in accordance with, and subject to the conditions of, the applicable netting contract.

((f)) ** Limitation on claims for entitlement** A failed member of a clearing organization shall have no recognizable claim against any member of a clearing organization for any amount based on such covered contractual payment entitlements other than its net entitlement.

((g)) ** Effectiveness notwithstanding status as member** This section shall be given effect notwithstanding that a member is a failed member.

((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 ), and shall not be stayed, avoided, or otherwise limited by any State or Federal law (other than , , and ).section 561(b)(2) of title 11section 1821(e) of this titlesection 1787(c) of this titlesection 78eee(b)(2) of title 15

§ 4403

Release: pl-119-102 (2026-07-12)

§ 4405

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