The International Swaps and Derivatives Association, Inc. (ISDA) has recognised the Astana International Financial Centre (AIFC) as a netting-friendly jurisdiction and published its legal opinion prepared by Dentons Kazakhstan LLP for ISDA members.
The legal opinion recognises the enforceability of close-out netting of the ISDA Master Agreements[1] under the Acting Law of the AIFC. The publication of the opinion is an important contribution to Kazakhstan’s financial market infrastructure as the recognition encourages global and national institutions to carry out their derivative transactions from the AIFC.
Close-out netting is a legal mechanism used in the financial industry to mitigate risk in the event of a counterparty’s default. It allows parties in a bilateral agreement to offset their obligations against each other, calculating a net amount to be paid by one party to the other, rather than setting each obligation individually.
The AIFC Netting Regulations and the supporting provisions in other AIFC Acts provide firms with a high degree of legal certainty and comfort to trade with the AIFC firms leading to significant efficiencies and increased liquidity on the local market.
AFSA Chief Executive Officer Nurkhat Kushimov commented: “Publication of a netting opinion demonstrates that AFSA remains committed to working closely with international organisations to further develop the AIFC’s legal and regulatory framework, ensuring it remains at the forefront of financial innovation and services.”
“Ensuring the enforceability of close-out netting is the single most important step a country can take to improve the safety and efficiency of its derivatives market. The AIFC joins more than 80 jurisdictions worldwide to be covered by an ISDA netting opinion,” says Dr Peter Werner, Senior Counsel at ISDA.
Vassiliy Zenov, the head of Banking and Finance at Dentons in Kazakhstan commented: “We are pleased to issue the Netting Opinion in relation to the AIFC law for the benefit of the ISDA members, and therefore the AIFC netting regime should now be covered for close-out netting purposes. We are also delighted to be instrumental to the practical implementation of the AIFC law and its financial markets.”
The close-out netting opinion is not only a critical element for risk management in financial transactions. It is also a testament to the AIFC’s commitment to adopting international best practices and creating a safe, efficient, and globally competitive financial ecosystem.
In 2022, the ISDA published a country update on the AIFC jurisdiction, and the publication of the legal opinion by ISDA marks the formal recognition of the AIFC as a netting-friendly jurisdiction.
Reference:
Since 1985, ISDA has worked to make the global derivatives markets safer and more efficient. Today, ISDA has over 1,000 member institutions from 77 countries. These members comprise a broad range of derivatives market participants, including corporations, investment managers, government and supranational entities, insurance companies, energy and commodities firms, and international and regional banks. In addition to market participants, members also include key components of the derivatives market infrastructure, such as exchanges, intermediaries, clearing houses and repositories, as well as law firms, accounting firms and other service providers. Information about ISDA and its activities is available on the Association’s website: https://www.isda.org/. Follow us on X, LinkedIn and YouTube.
Dentons is a global legal practice providing client services worldwide through its member firms and affiliates. Across over 80 countries, Dentons helps you grow, protect, operate and finance your organization by providing uniquely global and deeply local legal solutions. Polycentric, purpose-driven and committed to inclusion, diversity, equity and sustainability, we focus on what matters most to you. Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 160 locations. Dentons is the leading global law firm in Central Asia. With a presence in Kazakhstan dating back more than 30 years, and offices in Almaty and Astana, our team has supported clients in many of the most important transactions and litigations in the market, while helping to shape the local business climate and practice of law. www.dentons.com.
The Astana Financial Services Authority (AFSA) is the independent regulator of the Astana International Financial Centre (AIFC), which is established in accordance with the Constitutional Law of the Republic of Kazakhstan “On the Astana International Financial Centre” for the purposes of regulating financial services and related activities in the AIFC. AFSA administers the AIFC Regulations and Rules and is responsible for the authorisation, registration, recognition and supervision of financial firms and market institutions in the AIFC.
Around 2,500 firms from 78 countries are registered in the AIFC. These firms provide banking, insurance, investment, professional and other services. The range of financial services offered at the AIFC is comparable to the list of services available in long-established financial centers of the world, such as London, Hong Kong, Singapore, Dubai and others. www.afsa.kz
The Astana International Financial Centre (AIFC) is an independent jurisdiction with a favourable legal and regulatory environment and a developed infrastructure for starting and doing business, attracting investment, creating jobs and developing Kazakhstan's economy. https://aifc.kz/
Contact information:
Public Relations and Communications Division of AFSA:
+7 (717) 264 73 43; +7 7172 61-37-45 email: [email protected]
[1] An ISDA Master Agreement is the standard document regularly used to govern over-the-counter derivatives transactions. The agreement, which is published by the International Swaps and Derivatives Association (ISDA), outlines the terms to be applied to a derivatives transaction between two parties, typically a derivatives dealer and a counterparty.
Скопировать ссылку