Markets in Financial Instruments and Miscellaneous Provisions Act 2007

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Amendment to section 1 of Netting of Financial Contracts Act 1995.

10.— Section 1 of the Netting of Financial Contracts Act 1995 is amended—

(a) by inserting the following after the definition of “the Companies Acts”:

“ ‘ entity ’ includes—

(a) a natural or legal person, including a state or any international organisation duly established,

(b) any subdivision or authenticating or other authority of a state or international organisation, and

(c) an unincorporated body of persons;”,

(b) by substituting the following for the definition of “financial contracts”:

“ ‘ financial contracts ’ means one or more contracts consisting of one or more or a combination of the following:

(a) interest-rate contracts which are one or more of—

(i) single-currency interest rate swaps,

(ii) basis swaps,

(iii) forward-rate agreements,

(iv) interest-rate futures,

(v) interest-rate options,

(vi) other contracts of a similar nature to those specified in any of subparagraphs (i) to (v), and

(vii) contracts which are combinations of contracts referred to in subparagraphs (i) to (vi);

(b) foreign-exchange contracts which are one or more of—

(i) cross-currency interest-rate swaps,

(ii) spot foreign-exchange contracts,

(iii) forward foreign-exchange contracts,

(iv) currency futures,

(v) currency options,

(vi) other contracts of a similar nature to those specified in any of subparagraphs (i) to (v), and

(vii) contracts which are combinations of contracts referred to in subparagraphs (i) to (vi);

(c) contracts relating to, or which concern indices relating to, one or more of equities, bonds, gold, precious metals other than gold, and commodities other than precious metals, or a combination of them, which consist of one or more of—

(i) swaps,

(ii) spot contracts,

(iii) forward contracts,

(iv) futures,

(v) options,

(vi) other contracts of a similar nature to those specified in any of subparagraphs (i) to (v), and

(vii) contracts which are combinations of contracts referred to in subparagraphs (i) to (vi);

(d) securities lending and securities borrowing contracts;

(e) sale and repurchase agreements, including reverse repurchase agreements, in relation to securities;

(f) buy and sell back agreements in relation to either or both securities and equities;

(g) in relation to equities,

(i) equities lending and equities borrowing contracts, and

(ii) sale and repurchase agreements, including reverse repurchase agreements;

(h) in relation to commodities,

(i) commodity lending and commodity borrowing contracts, and

(ii) sale and repurchase agreements, including reverse repurchase agreements;

(i) contracts for either or both the assumption of and laying off of credit risk—

(i) on loans, debt securities or other assets, or

(ii) in relation to an entity,

or other contracts of a similar nature;

(j) any derivatives not otherwise encompassed by paragraphs (a) to (i) or paragraphs (k) to (o) concerning a reference item or index, whether cash-settled or physically settled, including—

(i) swaps,

(ii) spot contracts,

(iii) forwards,

(iv) futures,

(v) options, and

(vi) contracts for difference;

(k) title transfer collateral arrangements;

(l) any net amount due under a netting agreement or a master netting agreement;

(m) agreements to buy or sell, clear or settle transactions in, or act as a depository for, any—

(i) financial asset, including, without limitation, any security (including any equity), currency, obligation evidencing debt (including a loan or deposit) and any negotiable or transferable instrument and any intangible asset, or

(ii) commodity (including precious metal), energy or energy source;

(n) contracts contained in points 4 to 7, 9 and 10 of Section C of Annex I to Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments;

(o) any contract included by virtue of section 2;

(p) contracts designated by regulations made under section 3.”,

and

(c) by substituting “agreement;” for “agreement.” in the definition of “party” and inserting the following after that definition:

“ ‘ reference item or index ’ means a reference item, rate or index relating to one or more of the following:

(a) interest;

(b) currencies;

(c) securities (including equities);

(d) commodities (including precious metals);

(e) weather;

(f) carbon or other emissions allowances;

(g) bandwidth;

(h) freight;

(i) energy (including energy sources such as electricity, oil, oil-related products, coal and gas);

(j) credit risk on any entity or asset;

(k) statistical data on economic conditions or any measure of economic risk or value;

(l) market loss;

(m) natural catastrophes;

(n) real property;

(o) renewable energy credits;

(p) regulatory licences or quotas;

(q) any factor not otherwise encompassed by paragraphs (a) to (p) which may impact on the business of an entity, regardless of whether it affects the business of a party to the relevant derivative.”.