§4402. Definitions
For purposes of this chapter-
(1) Broker or dealer
The term "broker or dealer" means-
(A) any company that is registered or licensed under Federal or State law to engage in the business of brokering, underwriting, or dealing in securities in the United States; and
(B) to the extent consistent with this chapter, as determined by the Board of Governors of the Federal Reserve System, any company that is an affiliate of a company described in subparagraph (A) and that is engaged in the business of entering into netting contracts.
(2) Clearing organization
The term "clearing organization" means a clearinghouse, clearing association, clearing corporation, or similar organization-
(A) that provides clearing, netting, or settlement services for its members and-
(i) in which all members other than the clearing organization itself are financial institutions or other clearing organizations; or
(ii) which is registered as a clearing agency under the Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.]; or
(B) that performs clearing functions for a contract market designated pursuant to the Commodity Exchange Act [7 U.S.C. 1 et seq.].
(3) Covered clearing obligation
The term "covered clearing obligation" means an obligation of a member of a clearing organization to make payment to another member of a clearing organization, subject to a netting contract.
(4) Covered contractual payment entitlement
The term "covered contractual payment entitlement" means-
(A) an entitlement of a financial institution to receive a payment, subject to a netting contract from another financial institution; and
(B) an entitlement of a member of a clearing organization to receive payment, subject to a netting contract, from another member of a clearing organization of a covered clearing obligation.
(5) Covered contractual payment obligation
The term "covered contractual payment obligation" means-
(A) an obligation of a financial institution to make payment, subject to a netting contract to another financial institution; and
(B) a covered clearing obligation.
(6) Depository institution
The term "depository institution" means-
(A) a depository institution as defined in section 19(b)(1)(A) of the Federal Reserve Act [12 U.S.C. 461(b)(1)(A)] (other than clause (vii));
(B) a branch or agency as defined in section 1(b) of the International Banking Act of 1978 [12 U.S.C. 3101];
(C) a corporation chartered under section 25(a) 1 of the Federal Reserve Act [12 U.S.C. 611 et seq.]; or
(D) a corporation having an agreement or undertaking with the Board of Governors of the Federal Reserve System under section 25 of the Federal Reserve Act [12 U.S.C. 601 et seq.].
(7) Failed financial institution
The term "failed financial institution" means a financial institution that-
(A) fails to satisfy a covered contractual payment obligation when due;
(B) has commenced or had commenced against it insolvency, liquidation, reorganization, receivership (including the appointment of a receiver), conservatorship, or similar proceedings; or
(C) has generally ceased to meet its obligations when due.
(8) Failed member
The term "failed member" means any member that-
(A) fails to satisfy a covered clearing obligation when due,
(B) has commenced or had commenced against it insolvency, liquidation, reorganization, receivership (including the appointment of a receiver), conservatorship, or similar proceedings, or
(C) has generally ceased to meet its obligations when dud.
(9) Financial institution
The term "financial institution" means a broker or dealer, a depository institution, a futures commission merchant, or any other institution as determined by the Board of Governors of the Federal Reserve System.
(10) Futures commission merchant
The term "futures commission merchant" means a company that is registered or licensed under Federal law to engage in the business of selling futures and options in commodities.
(11) Member
The term "member" means a member of or participant in a clearing organization, and includes the clearing organization.
(12) Net entitlement
The term "net entitlement" means the amount by which the covered contractual payment entitlements of a financial institution or member exceed the covered contractual payment obligations of the institution or member after netting under a netting contract.
(13) Net obligation
The term "net obligation" means the amount by which the covered contractual payment obligations of a financial institution or member exceed the covered contractual payment entitlements of the institution or member after netting under a netting contract.
(14) Netting contract
(A) In general
The term "netting contract"-
(i) means a contract or agreement between 2 or more financial institutions or members, that-
(I) is governed by the laws of the United States, any State, or any political subdivision of any State, and
(II) provides for netting present or future payment obligations or payment entitlements (including liquidation or close-out values relating to the obligations or entitlements) among the parties to the agreement; and
(ii) includes the rules of a clearing organization.
(B) Invalid contracts not included
The term "netting contract" does not include any contract or agreement that is invalid under or precluded by Federal law.
(
References in Text
This chapter, referred to in par. (1)(B), was in the original "this title", and was translated as reading "this subtitle" meaning subtitle A (§§401–407) of title IV of
The Securities Exchange Act of 1934, referred to in par. (2)(A)(ii), is act June 6, 1934, ch. 404,
The Commodity Exchange Act, referred to in par. (2)(B), is act Sept. 21, 1922, ch. 369,
Section 25(a) of the Federal Reserve Act, referred to in par. (6), which is classified to subchapter II (§611 et seq.) of chapter 6 of this title, was renumbered section 25A of that act by
Amendments
1992-Par. (14)(B).
Effective Date of 1992 Amendment
Amendment by