BAHRAIN: Central Bank of Bahrain Consultation on Proposed Netting Law

Tuesday February 14 2017

As part of the Central Bank of Bahrain’s (CBB) objective in enhancing its regulatory framework, the CBB is proposing a “Netting law”. The Law shall replace and supersede Resolution No. [44], 2014, promulgating Regulation (the “2014 Regulation”) for Close-Out Netting under a Market Contract, issued by the Central Bank on December 7, 2014.

All Qualified Financial Instruments entered into prior to the commencement of the Law shall henceforward be governed by the provisions of the Law as if this Law had been in force on the date on which those Qualified Financial Contracts were entered into by the parties thereto.

The provisions of a Netting Agreement will be enforceable in accordance with their terms, including against an Insolvent Party, and, where applicable, against a guarantor or other Person (including a guarantor or other Person that is insolvent) providing security for a party and will not be stayed, avoided or otherwise limited by:

(a) The appointment of, or any application for the appointment of, a Liquidator, or any action of a Liquidator;

(b) Any provision of law relating to bankruptcy, (including any compulsory winding up procedure or proceeding), reorganisation, composition with creditors, receivership, conservatorship or any other Insolvency Proceeding to which a party may be subject; or

(c) Any other provision of law that may be applicable to an Insolvent Party,

subject to the conditions contained in the applicable Netting Agreement.

Click on the link above for further details.