Article 5d
Recognition of contractual netting as risk-reducing
Institutions may treat as risk reducing in accordance with Article 5e only the following types of contractual netting agreements where such netting agreement has been recognised by competent authorities in accordance with Article 296 of Regulation (EU) No 575/2013 and where the institution meets the requirements set out in Article 297 of that Regulation:
(a)
bilateral contracts for novation between an institution and its counterparty under which mutual claims and obligations are automatically amalgamated in such a way that the novation fixes one single net amount each time it applies so as to create a single new contract that is binding on the parties and replaces all former contracts and all obligations between parties pursuant to those contracts;
(b)
other bilateral agreements between an institution and its counterparty.