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Financial Services Risk Insights Vol V

Bilateral Netting of Qualified Financial Contracts Act, 2020: What does it mean for the financial markets

The Bilateral Netting Law is based on the International Swap Dealers Association’s (ISDA’s) Model Netting Act, which serves as a guide for regulators and policymakers worldwide. The law provides an unambiguous legal framework for the enforceability of netting for qualified financial contracts.

In the fifth volume of our Financial Services Risk Insights, we delve into the impact of the change that this legislation will bring about. While details on how exactly the close-out netting arrangements will operate under the Insolvency and Bankruptcy Code, 2016, are yet to be worked out, this reform is expected to definitely deepen the OTC derivative markets and help rationalise capital in a far more efficient manner.

We hope you find this publication interesting.