Fed proposes expanding netting protection eligibility

Federal Reserve

The Federal Reserve is proposing to expand the range of institutions that receive netting contract protections.

A netting contract is one in which the parties involved agree to pay or receive the net, rather than the gross, payment due. It aims to increase market liquidity and reduce counterparty risk.

Some financial institutions are protected under the Federal Deposit Insurance Corporation Improvement Act of 1991, which provides certainty that contracts will be enforced in the event of

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