The International Swaps and Derivatives Association (ISDA) highlighted the publication of Saudi netting legislation and said it will shortly publish a netting opinion to support close-out netting certainty for both conventional and Islamic derivatives with Saudi counterparties. ISDA said the Saudi framework is based on ISDA’s Model Netting Act and argued enforceable netting reduces credit risk by allowing obligations to be offset into a single payable amount, supporting banks’ capacity to lend and trade. The planned opinion would add to ISDA’s existing suite of 90 netting opinions globally and is intended to provide the legal certainty regulators typically require for close-out netting to be recognized as risk-reducing in capital requirements. The remarks also pointed to further building blocks for a deeper local derivatives market, including decisions on permitted activity, registration and disclosure standards, and whether to introduce clearing, margin or reporting mandates and related risk governance expectations.
ISDA 2025-02-19
International Swaps and Derivatives Association to publish Saudi close-out netting opinion following new netting legislation
The International Swaps and Derivatives Association (ISDA) announced Saudi netting legislation and plans to release a netting opinion to enhance close-out netting certainty for conventional and Islamic derivatives with Saudi counterparties. The framework, based on ISDA’s Model Netting Act, aims to reduce credit risk and support banks' lending and trading capacities, while considering further developments for a deeper local derivatives market.