Malaysia close to becoming a clean netting jurisdiction

Banks will save hundreds of millions of dollars in risk-weighted assets as netting is permitted and collateral becomes enforceable in Malaysia

Malaysia is about to become a netting-friendly jurisdiction which means collateral will be enforceable in the event of default and payment will be calculated on a net basis rather than being grossed up for each individual transaction. This arrangement is a prerequisite for favourable capital treatment under Basel III – with dealers saying the upshot will be an increase in business.

The Netting of Financial Agreements Bill was passed by Malaysia's parliament late last year and now just requires