User name
Password
Remember
Log in
Register Lost Password?
Latest Updates
New for 2008 - FIA FOA International Derivatives Expo (IDX)
will comprise the 15th International Derivatives Conference & NEW International Trade Exhibition.
For further information and ro register on-line click here

REGISTER BEFORE 16 MAY AND SAVE
APG on Wholesale Financial Markets and Services International Derivatives Week 2008 - 9-13 June 2008 . For further information click here
Site map Home
Master Netting Agreements

“Netting risk” is the risk that firms' netting arrangements with their customers may be susceptible to challenge by a liquidator in the event of customer default, with the result that the liquidator could be entitled to claim and realise customers' profitable transactions for the benefit of creditors while leaving the firm to claim for the gross amount of the losses on unprofitable transactions in the liquidation. Effective netting arrangements, on the other hand, mean that a firm may net off profitable and losing transactions against each other, thereby limiting their loss in the event of a default.

As a result, the FOA, with the support of a number of firms, developed a Master Netting Agreement (MNA) and secured positive legal opinions from key jurisdictions around the world. The Financial Services Authority requires Netting Agreements to be supported by positive legal opinions in order to comply with its rules. Each firm (legal entity) must be able to demonstrate that legal opinions have been commissioned specifically for that firm, or that it is a part of an acceptable “pool” arrangement such as that run by the FOA.

The FOA has recently commissioned a major update of the available opinions to ensure compliance with the BIPRU 13.7.6 requirement that “the legal validity of [a firm's] contractual netting is kept under review in the light of possible changes in the relevant laws”.