"Netting agreement"

Sec. 6. (a) As used in this chapter, "netting agreement" means a new agreement that: (1) allows the parties to a previous agreement to aggregate the amounts owing by each party under all transactions that are outstanding under the previous agreement; and (2) replaces the amounts owing under the previous agreement with a single net amount: (A) resulting from the aggregation under subdivision (1); and (B) owing: (i) by one (1) party; and (ii) to the other party; to the previous agreement. (b) The single net amount described in subsection (a)(2) may be determined as follows: (1) In the event of a relevant default (including counterparty bankruptcy) as specified in the previous agreement, all transactions of a certain type are netted at: (A) market value; or (B) if: (i) otherwise specified in the contract; or (ii) market value is impossible to obtain; an amount equal to the loss suffered by the nondefaulting party as a result of the default. (2) Under the new agreement, the parties agree that legal obligations of the parties to make required payments under at least one (1) series of related transactions under the previous agreement are: (A) canceled; and (B) replaced by a new legal obligation to make payments on only the single net amount under the new agreement. (3) In the event of a cash settled trade, the parties agree that legal obligations of: (A) the parties; or (B) a party and parents or affiliates of a party; under related or unrelated transactions are canceled and replaced by the cash settled trade.