المملكة: The “financial market” determines the regulatory framework of the clearing agreements for its institutions

The Capital Market Authority presented, through the “survey”, the organizational framework for the clearing agreements of the financial market institutions, with the aim of organizing these agreements and the related financial guarantee arrangements, which relate to qualified financial contracts subject to oversight, provided that one of its parties is a financial market institution.
The new organization aims to ensure the entry into force of these contracts according to their provisions, even in the case of bankruptcy procedures.
The authority confirmed that qualified financial contracts will remain in effect and correct according to its provisions, regardless of any change that may occur on the financial conditions of the two parties.
Also, any clearing agreement will be binding against any party, including the bankrupt party, the guarantor, or any person providing a guarantee related to the obligatory party obligations.

Bankruptcy

The implementation or restriction of these agreements cannot be stopped as a result of bankruptcy procedures, whether issued by the bankruptcy secretary or the bankruptcy committee.
After opening bankruptcy procedures for one of the parties, the two parties ’commitment to payment is limited to settling all rights and obligations in accordance with the clearing agreement, so that the net commitment is paid only, as is specified in the terms of the agreement. Likewise, the right of the other party to receive the payments is limited to its net dues specified in the agreement, without any additional obligations.

The powers of the bankruptcy secretary

The commission clarified that the powers of the bankruptcy secretary or the bankruptcy committee do not include a suspension, nullification or preventing the implementation of the obligations stipulated in the clearing agreements.
Their powers only apply to the net amounts after liquidating all qualified financial contracts, as these amounts are part of the bankruptcy assets that are subject to the provisions of the bankruptcy system.
The commission stressed that the clearing agreements will remain in effect, and no suspension, suspension, or judicial nullity will affect their implementation. Also, the sale or liquidation of financial guarantees will be in accordance with the approved agreements, without the need for prior notification to any party, unless the agreement stipulates otherwise.

Multiple ends

The regulation stipulated that with regard to the agreements that include multi -branch parties, the obligations of the bankrupt local branch will be determined based on the net batches of it in accordance with the agreement.
These obligations are also reduced by any amounts that are paid to the uncontrolled party or any guarantees that are used to settle the obligations.
In the event of a bankruptcy of a local branch, the obligations of the two parties are calculated based on the values ​​of local or total payments, while reducing the obligations under any amounts that are paid or guarantees that are liquidated.
The commission pointed out that in the event that the bankrupt party gets a financial guarantee to support the obligations of the other party, it can keep this guarantee and implement it when needed, provided that any surplus is returned to the bankrupt or its representative.