NETTING OF FINANCIAL AGREEMENTS ACT 2015

This Act comes into operation on a date to be appointed by the Minister by notification in the Gazette.

Interpretation

a provision in a qualified financial agreement which provides that upon the occurrence of the events specified by the parties in the agreement, all obligations owed by one party to another party under a qualified financial transaction are reduced to or replaced with a single net amount in accordance with the qualified financial agreement; or

any other mechanism which has the effect of determining a single net amount prescribed by the Minister to be a netting provision under paragraph 6(1)(b);

“prescribed” means prescribed by order published in the

Gazette;

“qualified financial agreement” means—

a master agreement, with a netting provision, in respect of one or more qualified financial transactions, and where a master agreement is also in respect of one or more transactions that are not qualified financial transactions, the master agreement shall be a qualified financial agreement only with respect to the transactions that are qualified financial transactions;

any agreement or arrangement prescribed by the

Minister to be a qualified financial agreement under paragraph 6(1)(a); or

an agreement relating to financial collateral that secures payment or performance of an obligation, including any agreement under which title to property has been provided for the purpose of such security, with respect to one or more qualified financial transactions under a master agreement referred to in paragraph (a) or an agreement or arrangement referred to in paragraph (b);

“qualified financial transaction” means the transaction referred to in section 5 and includes any other transaction prescribed by the Minister to be a qualified financial transaction under paragraph 6(1)(c);

“securities” includes securities which are in accordance with

Shariah.

WJW004137 BI.indd 6 3/6/15 4:26:58 PM

Netting of Financial Agreements 7

termination of qualified financial transactions entered into under the qualified financial agreement;

calculation of termination values owed by the parties to each other in respect of each of the qualified financial transactions under paragraph (a); and

determination of a single net amount of the termination values under paragraph (b) which becomes payable by one party to the other.

Form of financial collateral

cash or cash equivalents, including negotiable instruments and demand deposits;

securities, a securities account or a right to acquire securities; or

futures agreement or futures account.

Feature of qualified financial transaction

over-the-counter derivatives;

repurchase, reverse repurchase, buy-sell back in respect of securities; or

WJW004137 BI.indd 7 3/6/15 4:26:58 PM

Act 766

a lending or borrowing of unlisted debt securities under the Real Time Electronic Transfer of Funds and Securities

System established under subsection 44(1) of the Central

Bank of Malaysia Act 2009 [Act 701].

In this section, “derivative” means any agreement including an option, a swap, futures or forward contract, whose market price, value, or delivery or payment obligation is derived from, referenced to or based on, but not limited to, securities, commodities, assets, rates (including interest rates, profit rates or exchange rates) or indices and shall include a derivative which is in accordance with

Shariah.

Power of Minister to prescribe other qualified financial agreement, netting provision and qualified financial transaction

any other agreement or arrangement to be a qualified financial agreement;

any other mechanism which has the effect of determining a single net amount to be a netting provision; or

any other transaction to be a qualified financial transaction.

An order under subsection (1) shall be laid before the

Dewan Rakyat as soon as practicable after its publication in the

Gazette.

In this section—

“Central Bank of Malaysia” means the Central Bank of Malaysia which continues to exist pursuant to subsection 3(1) of the Central

Bank of Malaysia Act 2009;

“Malaysia Deposit Insurance Corporation” means the Malaysia

Deposit Insurance Corporation which continues to exist pursuant to subsection 3(1) of the Malaysia Deposit Insurance Corporation

Act 2011 [Act 720];

WJW004137 BI.indd 8 3/6/15 4:26:58 PM

Netting of Financial Agreements 9

“Pengurusan Danaharta Nasional Berhad” means the Pengurusan

Danaharta Nasional Berhad incorporated under the Companies Act 1965 [Act 125] for such purposes provided under the Pengurusan

Danaharta Nasional Berhad Act 1998 [Act 587];

“Securities Commission” means the Securities Commission established under section 3 of the Securities Commission Act 1993 [Act 498].

Period of stay

The Minister shall cause a reasonable notice to be given to persons affected by the period of stay prescribed under subsection (1), unless the circumstances do not permit.

The period prescribed under subsection (1) shall apply notwithstanding that any other period has been provided or prescribed under the provisions specified in Part II of the Schedule.

Continued application of relevant provisions in other written laws

An order under subsection (1) shall be laid before the

Dewan Rakyat as soon as practicable after its publication in the

Gazette.