51.The effects of bilateral netting agreements for covering SFTs will be recognized on a counterparty-by-counterparty basis if the agreements are legally enforceable in each relevant jurisdiction upon the occurrence of an event of default and regardless of whether the counterparty is insolvent or bankrupt. In addition, netting agreements must:

• •provide the non-defaulting party with the right to terminate and close out in a timely manner all transactions under the agreement upon an event of default, including in the event of insolvency or bankruptcy of the counterparty;
• •provide for the netting of gains and losses on transactions (including the value of any collateral) terminated and closed out under it so that a single net amount is owed by one party to the other;
• •allow for the prompt liquidation or setoff of collateral upon the event of default; and
• •be legally enforceable in each relevant jurisdiction upon the occurrence of an event of default regardless of the counterparty’s insolvency or bankruptcy.

52.Netting across positions held in the banking book and trading book will only be recognized when all netted transactions are marked to market daily, and the collateral instruments used in the transactions are recognized as eligible financial collateral in the banking book.