Qatar Financial Centre Achieves ISDA Recognition as a Netting Jurisdiction

Doha,July 16 (QNA) - The International Swaps and Derivatives Association (ISDA) has recognised Qatar Financial Centre (QFC) as an effective netting regime and published a positive legal opinion to its members, recognising the QFC as a netting friendly jurisdiction. This is a significant milestone and recognition for Qatar's financial market infrastructure and the world-class legal framework established by the QFC. This initiative will allow financial institutions and corporates in the QFC and in the State of Qatar, through the QFC, to confidently manage their risk exposure. ISDA has published a legal opinion prepared by an international law firm in Qatar, Simmons & Simmons LLP, for its members. The legal opinion confirms that financial netting arrangements under the ISDA Master Agreements are enforceable in the QFC. The QFC Netting Regulations and the supporting provisions in the QFC Insolvency Regulations, provide legal certainty in the QFC as to the enforceability of close-out netting for financial transactions such as derivative transactions in specified circumstances, including in the case of insolvency of a party to the transaction. Chief Executive Officer, QFC Authority, Yousuf Mohammed Al-Jaida, said: "ISDA's recognition of the QFC's regime is a vital contribution to the State of Qatar's financial market infrastructure. In Qatar, the regime will provide the first of its kind recognition for close-out netting to Qatar's financial institutions, including QFC firms, to benefit from this important risk mitigating mechanism." Chief Legal Officer, QFC Authority, Nasser Al Taweel, said "The ISDA recognition should encourage Qatar's financial institutions to carry out their financial transactions through special purpose companies in the QFC." The QFC Insolvency Regulations, including the netting provisions, are part of QFC's comprehensive legislative framework and an important part of its value proposition to corporates and financial institutions looking to benefit from the QFC's netting regime for financial transactions. The QFC netting regime is based on ISDA's Model Netting Act. The ISDA Model Netting Act provides a framework that has been adopted by major international financial jurisdictions that recognise netting arrangements. Close-out netting is commonly used to manage default risks in derivative contracts in over-the-counter derivatives transactions. It is a legal mechanism where two counterparties agree to offset their obligations upon default, in priority to the normal application of insolvency rules which are typically used when a debtor is being wound up. The QFC endeavours to promote Qatar as a lucrative business destination. Companies that wish to establish a business in the QFC are guided throughout the process by a dedicated QFC relationship manager who assists them in obtaining a license and operating a business. QFC firms enjoy competitive benefits, such as operating within a legal environment based on English common law, the right to trade in any currency, 100 percent foreign ownership, 100 percent repatriation of profits, 10 percent corporate tax on locally sourced profits, and an extensive double tax treaty agreement network with 60+ countries. In addition, the Employment Standards Office of the QFC embodies a unique Administrative Employment Dispute Resolution Centre operating under International Labour Organization (ILO) standards providing conciliation and adjudication services free of charge to resolve workplace conflicts.(QNA)