MEANING AND BENEFITS Close-out clearing allows parties in the financial market to conduct financial transactions with reduced exposure to credit and market risk and to limit counterparties` credit risk to a single net amount to be paid, rather than on a gross basis upon cessation of transactions. The Act provides a legal framework for clearing financial transactions in Malaysia, in line with international practice. Close-out clearing is an important risk management mechanism used by financial institutions and other financial market participants for financial derivatives and repo transactions. The law ensures that the mechanism for clearing financial transactions is legally applicable. The applicability of the “close-out” will provide benefits in reducing credit risk by allowing counterparties to charge credit risk positions instead of a gross commitment, thereby improving operational efficiency and reducing systemic risk in the financial system. . . .