Saudi Arabia's Capital Markets Authority (CMA) Board has approved the Close-out Netting and related Collateral Arrangements Regulation, establishing a framework for the enforceability of netting agreements and associated financial collateral arrangements where one party is a capital market institution. The regulation takes effect on its publication date and is intended to ensure qualified financial contracts remain enforceable in an event of default by either party. The rules set out how defaults and other specified cases are handled for in-scope netting agreements, covering arrangements linked to one or more qualified financial contracts under CMA oversight and preserving enforceability even if circumstances change after execution. The regulation includes key definitions, specifies financial collateral arrangements, scope and covered entities, and defines qualified financial contracts and transactions that would be exempt from provisions of the Bankruptcy Law; it also positions the framework as aligned with international developments and practices referenced by the International Swaps and Derivatives Association. The CMA had previously consulted on a draft close-out netting framework from February 24, 2025 for 30 calendar days via the National Competitiveness Center’s public consultation platform and the CMA website.
Saudi Arabia Capital Markets Authority 2025-07-03
Saudi Arabia's Capital Markets Authority approves regulation to enforce close-out netting and financial collateral arrangements for qualified financial contracts
Saudi Arabia's Capital Markets Authority (CMA) approved the Close-out Netting and Collateral Arrangements Regulation, establishing enforceability for netting agreements and financial collateral arrangements involving capital market institutions. The regulation ensures qualified financial contracts remain enforceable in default events, aligning with international practices. It includes definitions, scope, and exemptions from the Bankruptcy Law, and was publicly consulted on previously.