Hong Kong Ordinances

CLEARING AND SETTLEMENT SYSTEMS ORDINANCE - SECT 25

Netting may be effected

Division 4—Netting of obligations of insolvent participants

(1) Where—

   (a)  a court has made an order for bankruptcy or winding up of a
        participant in a designated system;

   (b)  a resolution for voluntary winding up of a participant in a designated
        system has been passed; or

   (c)  a directors’ voluntary winding up statement in respect of a
        participant in a designated system has taken effect, then,
        notwithstanding any provision of the law of insolvency, the system
        operator of the designated system may effect the netting of all
        obligations owed to or by the participant incurred up to the point of
        time that applies for the purposes of section 24(1).

(2) Where any netting has been effected as provided in subsection

(1), then—

   (a)  the obligations that are netted shall be disregarded in the bankruptcy
        or winding up proceedings; and

   (b)  any net obligation owed to or by the participant that has not been
        discharged—

        (i)    is payable to the participant and may be recovered for the
               benefit of his creditors; or

        (ii)   is provable in the bankruptcy or winding up, as the case may
               be.

(3) A netting effected as provided in subsection (1) and any payment made by a
participant as provided in subsection (2) shall not be voidable in the
bankruptcy or winding up proceedings.