CA-15.4.2
In both cases in CA-15.5.1 (a) and (b), a
(a) A netting contract or agreement with the counterparty that creates a single legal obligation, covering all included transactions, such that the Bahraini conventional bank licensee would have either a claim to receive or obligation to pay only the net sum of the positive and negative mark-to-market values of included individual transactions in the event a counterparty fails to perform due to any of the following: default, bankruptcy, liquidation or similar circumstances;
(b) Written and reasoned legal opinions that, in the event of a legal challenge, the relevant courts and administrative authorities would find the Bahraini conventional bank licensee's exposure to be such a net amount under:
(i) The law of the home jurisdiction in which the counterparty is incorporated and, if the foreign branch of a counterparty is involved, then also under the law of jurisdiction in which the branch is located;
(ii) The law that governs the individual transactions; and
(iii) The law that governs any contract or agreement necessary to effect the netting.
The CBB must be satisfied that the netting is enforceable under the laws of each of the relevant jurisdictions; and
The CBB must be satisfied that the netting is enforceable under the laws of each of the relevant jurisdictions; and
(c) Procedures in place to ensure that the legal characteristics of netting arrangements are kept under review in the light of possible changes in relevant law.
Added: October 2018