Banks begin China close-out netting work after Isda opinion
Rise in collateralised transactions will be next step, dealers say
Foreign banks in China are starting work on implementing close-out netting for derivatives transactions, after the International Swaps and Derivatives Association issued a legal opinion that provides long-awaited recognition that the practice is enforceable under Chinese law.
Isda’s netting opinion, published on August 1, comes on the same day that China’s futures and derivatives law takes effect. The new law aims to provide a statutory framework for derivatives in China’s onshore market.
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