The PSS Act 2007 defines “netting” and legally recognizes
settlement finality. It states that a settlement, whether gross or net,
will be final and irrevocable as soon as the money, securities,
foreign exchange or derivatives or other transactions payable as a
result of such settlement is determined, whether or not such money,
securities or foreign exchange or other transactions is actually paid.
In case a system participant is declared insolvent, or is dissolved or
is wound up, no other law can affect any settlement which has become
final and irrevocable and the right of the system provider to
appropriate the collaterals contributed by the system participants
towards settlement or other obligations.
This Act also legally recognizes the loss allocation among
system participants and payment system, where the rules provide for
this mechanism.
