Saudi Arabia's Capital Market Authority (CMA) opened a public consultation on a Draft Regulatory Framework for Close-Out Netting for Capital Market Institutions, setting out proposed rules intended to ensure the enforceability of qualified financial contracts involving a capital market institution in the event of default by either party. The consultation is open for 30 calendar days and closes on 26 March 2025 (26/09/1446H). The draft proposes measures for dealing with default under a netting agreement and other specified cases where one party is a capital market institution, covering netting agreements and associated financial collateral arrangements linked to one or more qualified financial contracts under CMA oversight. It includes provisions and definitions for close-out netting, sets out the scope of application and entities subject to the framework, and specifies qualified financial contracts and transactions proposed to be exempt from the Bankruptcy Law; the CMA also positions the approach as consistent with international developments and ISDA guidance on close-out netting enforceability, including in the context of bankruptcy procedures. The CMA will consider stakeholder feedback in finalising the draft framework.
Saudi Arabia Capital Markets Authority 2025-02-24
Saudi Arabia's Capital Market Authority launches consultation on draft close-out netting framework for capital market institutions
Saudi Arabia's Capital Market Authority (CMA) has launched a public consultation on a Draft Regulatory Framework for Close-Out Netting for Capital Market Institutions. The draft ensures enforceability of qualified financial contracts in default scenarios, covering netting agreements and financial collateral arrangements. It aligns with international standards and ISDA guidance, proposing exemptions from the Bankruptcy Law for certain transactions.