(1) If:

- (a)
- SEGC allows a claim by a person (in this section called the
*claimant*) in respect of a liability of another person (in this section called the*defaulter*); and - (b)
- the liability of the defaulter to the claimant has been reduced, by an
amount of money or a number of securities (in this section called the
*set-off reduction*), because of:

- (i)
- the exercise by the claimant or the defaulter of a right of set-off, whether under an agreement or otherwise; or
- (ii)
- the operation of an agreement so far as it provides for the automatic set-off of liabilities; and

- (c)
- but for this section, the reduction of the defaulter's liability would not be taken into account when working out the obligations of SEGC in respect of the claim;

- this section applies for the purposes of working out those obligations.

(2) If:

- (a)
- SEGC is required to satisfy the claim by paying an amount; and
- (b)
- the set-off reduction consists of an amount;

- the amount SEGC must pay in respect of the claim is reduced by the amount of
the set-off reduction.

(3) If:

- (a)
- SEGC is required to satisfy the claim by paying an amount; and
- (b)
- the set-off reduction consists of a number of securities;

- then:

- (c)
- the Board must work out the value of the securities; and
- (d)
- the amount SEGC must pay in respect of the claim is reduced by the value worked out under paragraph (c).

(4) If:

- (a)
- SEGC is required to satisfy the claim by transferring securities of a particular kind; and
- (b)
- the set-off reduction consists of a number of securities of that kind;

- the number of securities that SEGC must transfer in respect of the claim is
reduced by the number referred to in paragraph (b).

(5) If:

- (a)
- SEGC is required to satisfy the claim by transferring securities of a particular kind; and
- (b)
- the set-off reduction consists of a number of securities that are not of that kind;

- then:

- (c)
- the Board must work out:

- (i)
- the value of the securities that constitute the set-off reduction; and
- (ii)
- the number of securities of the kind referred to in paragraph (a) that are equal in value to the value worked out under subparagraph (i); and

- (d)
- the number of securities that SEGC is required to transfer in respect of the claim is reduced by the number worked out under subparagraph (c)(ii).

(6) If:

- (a)
- SEGC is required to satisfy the claim by transferring securities of a particular kind; and
- (b)
- the set-off reduction consists of an amount of money;

- then:

- (c)
- the Board must work out the number of securities of that kind that are equal in value to that amount; and
- (d)
- the number of securities that SEGC must transfer in respect of the claim is reduced by the number worked out under paragraph (c).