Chapter 1 Chapter 1 Netting
Article (108) Close-Out Netting Due to Market Contract(a) The Central Bank shall issue regulations regarding conditions and controls to be incorporated in a Market Contract as well as the procedures for carrying out clearance according to such contract.(b) Notwithstanding the provisions of any other law relating to clearance, bankruptcy or insolvency, any Close-out Netting shall be carried out according to the Market Contract in connection with debts, loans and dealings between the parties thereof that were originated or completed before any of the parties became insolvent or bankrupt.. The same shall apply against the parties of the contract their receivers in bankruptcy and their creditors.(c) The previous paragraph shall not apply if one party knew or ought to have known that:1. an application, for the liquidation and winding up of the other party by reason of insolvency, is being considered by the concerned authority.2. the other party has taken formal steps under any other applicable law to liquidate or wind up by reason of bankruptcy.
Article (109) Exceptions(a) Notwithstanding the provisions of any other law, no restriction or suspensions shall be applied to any provision related to clearance according to a Market Contract.(b) Notwithstanding the provisions of any other law relating to clearance, bankruptcy or insolvency, the parties in a Market Contract may;(1) agree to any system which will enable the parties to convert a non-financial obligation into a financial one of equivalent value and to valuate such an obligation for the purposes of any clearance or Netting.(2) agree on the rate of exchange or the method to be used to establish the rate of exchange to be applied in effecting any clearance or Netting when the sums to be cleared or netted are in different currencies, and to establish the currency in which payment of the net sum is to be effected.(3) agree that any transactions carried out pursuant to any Market Contract shall be treated as a single transaction for the purposes of the contract whether such transactions were completed by the parties, a receiver in bankruptcy, a competent court, an officer representing the parties or that such transactions have been categorized or attributed to a certain type of trading.