KUALA LUMPUR, Nov 11 (Bernama) — The International Swaps and Derivatives Association (ISDA) has published legal opinions recognising the enforceability of close-out netting in Saudi Arabia, providing global financial institutions with greater legal certainty when transacting in the Kingdom’s derivatives market.
The move follows the Capital Market Authority’s (CMA) issuance of the Close-out Netting and Related Collateral Arrangements Regulation earlier this year, which formally establishes the legal framework for such arrangements.
Close-out netting allows counterparties in qualified financial contracts to offset obligations in the event of a default, leaving only a single net payment due. This mechanism reduces systemic risk and promotes orderly settlement of contracts, while enhancing investor confidence.
In a statement, CMA said the new regulation strengthens the stability of the financial system and protects investors by ensuring the enforceability of qualified financial contracts, thereby safeguarding the rights of all parties involved.
CMA Deputy for Market Institutions, Raed Alhumaid said the development reflects Saudi Arabia’s ongoing efforts to reinforce its financial infrastructure.
“We welcome ISDA’s legal opinions recognising the enforceability of close-out netting in the Kingdom following the issuance of our regulation this year,” he said.
For international institutions, the recognition provides a clearer legal foundation for participation in Saudi Arabia’s derivatives market, supporting growth in market liquidity and depth.
Saudi Arabia’s derivatives market, launched in 2020 with MT30 Index Futures and later expanded to single stock futures in 2022 and single stock options in 2023, continues to evolve as a key platform for hedging and risk management.
The new framework defines qualified financial contracts, outlines the scope of application and exemptions from the Bankruptcy Law, and is expected to enhance the stability and sustainability of the Kingdom’s financial and capital market sectors.
— BERNAMA
BERNAMA provides up-to-date authentic and comprehensive news and information which are disseminated via BERNAMA Wires; www.bernama.com; BERNAMA TV on Astro 502, unifi TV 631 and MYTV 121 channels and BERNAMA Radio on FM93.9 (Klang Valley), FM107.5 (Johor Bahru), FM107.9 (Kota Kinabalu) and FM100.9 (Kuching) frequencies.
Follow us on social media :
Facebook : @bernamaofficial, @bernamatv, @bernamaradio
Twitter : @bernama.com, @BernamaTV, @bernamaradio
Instagram : @bernamaofficial, @bernamatvofficial, @bernamaradioofficial
TikTok : @bernamaofficial
