In December 2022, FIA published new industry standard netting and collateral legal opinions for the People’s Republic of China (PRC). Recent positive developments in the PRC’s legislative framework for derivatives, specifically the adoption of the Futures and Derivatives Law in 2022, made it possible for FIA to commission these opinions for the benefit of global clearing firms that provide derivatives clearing services (cleared OTC and ETD) to PRC clients when they wish to access non-PRC CCPs under the English law governed FIA Terms of Business.
FIA netting opinions cover the legal effectiveness of FIA close-out netting provisions, FIA set-off provisions, and FIA title transfer collateral provisions under the laws of the client jurisdiction, in the event of client default. FIA collateral opinions typically address the enforceability of FIA security interest provisions in the FIA Terms of Business upon client default. These opinions are primarily given to help firms comply with certain prudential requirements that recognise legally effective close-out netting arrangements, as well as enforceable collateral arrangements as risk reducing. They are also beneficial to firms in their daily risk management processes.
The PRC netting and collateral opinions were issued by He Ping Law Firm working with Clifford Chance LLP and are available to FIA member and non-member firms upon subscription.
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