The Central Bank of Chile has opened a consultation on draft rules that would apply the same position netting framework currently used for derivatives to repurchase agreement and reverse repurchase agreement (repo) transactions. The proposal, developed under new powers granted by the Resilience Law (Law 21.641), would extend Chapter III.D.2 of the Central Bank of Chile’s Compendium of Financial Regulations to repos. The draft is designed to provide legal certainty for close-out netting of reciprocal repo positions between two counterparties, and the related collateral arrangements, where one party is in insolvency. Financial stability safeguards would be introduced to help prevent contract close-outs from occurring abruptly in ways that could affect system liquidity, and the Central Bank of Chile would recognise local or international master agreements under which repos could be conducted and fall within the scope of the framework. The existing derivatives netting regime in Chapter III.D.2 would not be changed. Comments are invited until 17 August 2025, and further detail is set out in the accompanying explanatory note.
Central Bank of Chile 2025-07-18
Central Bank of Chile launches consultation to extend close-out netting and collateralisation rules to repo transactions
The Central Bank of Chile is consulting on draft rules to extend the derivatives position netting framework to repurchase and reverse repurchase agreements under the Resilience Law. The proposal aims to ensure legal certainty for close-out netting and collateral arrangements in insolvency situations, introducing safeguards to maintain system liquidity. Existing derivatives netting rules remain unchanged.