3. Applicability of Act.—The provisions of this Act shall apply to a qualified financial contract
entered into on a bilateral basis between qualified financial market participants, either under a netting
agreement or otherwise, where at least one of such participants shall be an entity regulated by an
authority specified in the First Schedule.
4. Powers of authority.— The relevant authority may, by notification,—
(a) designate any bilateral agreement or contract or transaction, or type of contract regulated by
it, as qualified financial contract:
Provided that the contract, so designated under this clause, shall not include any contract,—
(i) entered into between such parties and on such terms as the Central Government may, by
notification, specify; or
(ii) entered into on multilateral basis in accordance with the provisions of the Securities
Contracts (Regulation) Act, 1956 (42 of 1956) and the Payment and Settlement Systems Act,
2007 (51 of 2007);
(b) specify any entity regulated by it, as a qualified financial market participant to deal in
qualified financial contracts.
5. Enforceability of netting.—(1) Netting of the qualified financial contract shall be
enforceable—
(a) where such contract is entered into with a netting agreement, in accordance with the terms
of the netting agreement:
Provided that the inclusion of any non-qualified financial contract in a netting agreement shall
not invalidate the enforceability of netting of qualified financial contract under such agreement; or
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(b) where such contract is entered into without a netting agreement, in accordance with the
provisions of section 6.
(2) A qualified financial contract shall not be void and shall be deemed never to have been void or
unenforceable by reason of any law for the time being in force.
(3) Close-out netting of a qualified financial contract shall be enforceable against an insolvent
party, and, wherever applicable, against a guarantor or other person providing collateral or security for
a party and shall not be affected or stopped or otherwise limited by:—
(i) the appointment of, or any application for the appointment of, an administration practitioner,
or
(ii) applicability of any provision of law relating to administration, or
(iii) any other provision of law that may be applicable to an insolvent party
(4) Where a qualified financial market participant is subject to administration, then
notwithstanding,—
(i) any stay, injunction, avoidance, moratorium or similar proceedings or any other order of a
court, tribunal or authority, or
(ii) any order of adjudication or dissolution or winding up or resolution or insolvency, or
(iii) any rule, regulation, scheme, direction, guideline, circular or order,
made or issued under any law for the time being in force, close-out netting shall be applicable and
nothing contained therein shall affect the validity of close-out netting under this Act.
(5) The amount payable or other claims to be made in accordance with the close-out netting under
this Act shall be final, irrevocable and binding upon the parties to a qualified financial contract and
upon the administration practitioner, of the party in administration.