Abu Dhabi, UAE: Abu Dhabi Global Market (ADGM), the International Financial Centre in Abu Dhabi, is pleased to announce that the International Swaps and Derivatives Association (ISDA) has published two new legal opinions on the validity and enforceability of collateral arrangements under ISDA Credit Support Agreements within ADGM.
These opinions are the first ever published by ISDA in respect of any jurisdiction in the GCC and further reinforce ADGM’s position in providing a robust international legal framework, allowing financial institutions and corporates to efficiently manage risk.
ISDA’s collateral opinions on ADGM, prepared by Shearman & Sterling LLP for ISDA and its members, confirms the enforceability of collateral arrangements under ISDA's credit support documentation, for both collateral takers and collateral providers located in ADGM. The opinions complement ISDA’s netting opinion on the enforceability of ISDA’s 1992 and 2002 Master Agreements under the laws of ADGM.
ISDA Credit Support Agreements manage and mitigate default risks in derivative contracts in over-the-counter derivatives transactions by enabling trading parties to pledge variable levels of collateral in support of their trading positions on an ongoing basis. When granted on a reciprocal basis, such margin arrangements operate to reduce insolvency risk exposure to both counterparties and enable certain financial institutions to comply with international requirements such as margin regulations.
The ADGM Insolvency Regulations 2015, including netting and collateral provisions based upon the ISDA Model Netting Act, are part of ADGM's comprehensive legislative framework and an important part of its value proposition for parties which seek to engage in derivative trading activities.
About Abu Dhabi Global Market (ADGM)
Abu Dhabi Global Market (ADGM), an international financial centre (IFC) located in the capital city of the United Arab Emirates, opened for business on 21 October 2015. Established by a UAE Federal Decree as a broad-based financial centre, ADGM augments Abu Dhabi’s position as a global trade and business hub serving as a strategic link between the growing economies of the Middle East, Africa and South Asia and the rest of the world.
ADGM’s strategy is anchored by Abu Dhabi’s key strengths panning over private banking, wealth management, asset management, derivatives and commodities trading, financial innovation, sustainability and more. Comprising three independent authorities: ADGM Courts, the Financial Services Regulatory Authority and the Registration Authority, ADGM as an IFC governs the entire 114 hectares (1.14sqkm) of Al Maryah Island which is a designated financial free zone.
It enables registered financial and non-financial institutions, companies and entities to operate, innovate and succeed within an international regulatory framework based on common law. Since its inception, ADGM has been awarded the “Financial Centre of the Year (MENA)” for four consecutive years for its initiatives and contributions to the financial and capital markets industry in the region.*
For more details on ADGM, please visit www.adgm.com or follow us on Twitter and Instagram: @adglobalmarket and LinkedIn: @Abu Dhabi Global Market (ADGM)
* Source: The Global Investor Middle East and North Africa (MENA) Awards
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© Press Release 2020