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Effect of resolution measure on contracts where substantive obligations continue to be performed

Monetary Authority of Singapore Act 1970

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—(1) This section applies to a contract that satisfies both of the following:(a)one of the parties to the contract is —(i)a pertinent financial institution that is the subject of a resolution measure; or(ii)an entity that is part of the same group of companies as that of a pertinent financial institution where —(A)the pertinent financial institution is the subject of a resolution measure; and(B)the obligations of the entity under the contract are guaranteed or otherwise supported by the pertinent financial institution;(b)the substantive obligations of the contract (including all applicable basic substantive obligations) continue to be performed by the parties to the contract.(2) Despite any rule of law, written law or contract —(a)the resolution measure, and the occurrence of any event directly linked to it, are to be disregarded in determining the applicability of a provision in the contract enabling a party to exercise a termination right; and(b)any purported exercise of that termination right in reliance on that provision in the contract on the basis of either of those grounds in paragraph (a) has no effect.(3) For the purposes of subsection (1)(b), a basic substantive obligation of a pertinent financial institution (being an approved clearing house or an operator or a settlement institution of a designated payment system) under a contract is not considered to be no longer performed, by reason only that the institution allocates any loss to its participants, or uses collateral provided by or on behalf of its participants —(a)under its margin rules or default arrangements; or(b)pursuant to a resolution measure.

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