fbpx 54466-001: Enabling close-out netting in derivatives transactions and use of international standard contracts in financial markets | Asian Development Bank

Regional: Enabling close-out netting in derivatives transactions and use of international standard contracts in financial markets

Sovereign (Public) Project | 54466-001 Status: Active

The TA's objective is deeper and more inclusive financial sectors in selected ADB developing member countries (DMCs), with greater liquidity in financial transactions within and across their borders. This objective is consistent with ADB's Strategy 2030; in particular, the objectives of expanding private sector operations through increasing access to capital markets and enhancing domestic resource mobilization through developing capital markets to help channel savings more effectively for productive investments. The TA will achieve this by deepening knowledge and building expertise of close-out netting in derivatives transactions in government and private sector and of the use of international standard contracts in local financial markets by market participants. If requested by a DMC, the TA will support reforms to improve the legal and regulatory basis for close-out netting which is fundamental for the development of well-functioning derivatives markets.

Project Details

Project Officer
McBride, Nicholas Office of the General Counsel Request for information
Country
  • Regional
Sector
  • Finance
 
Project Name Enabling close-out netting in derivatives transactions and use of international standard contracts in financial markets
Project Number 54466-001
Country Regional
Indonesia
Uzbekistan
Project Status Active
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 6709-REG: Enabling Close-out Netting and Use of International Contracts
Technical Assistance Special Fund US$ 225,000.00
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Finance / Money and capital markets

Gender Equity and Mainstreaming No gender elements
Description The TA's objective is deeper and more inclusive financial sectors in selected ADB developing member countries (DMCs), with greater liquidity in financial transactions within and across their borders. This objective is consistent with ADB's Strategy 2030; in particular, the objectives of expanding private sector operations through increasing access to capital markets and enhancing domestic resource mobilization through developing capital markets to help channel savings more effectively for productive investments. The TA will achieve this by deepening knowledge and building expertise of close-out netting in derivatives transactions in government and private sector and of the use of international standard contracts in local financial markets by market participants. If requested by a DMC, the TA will support reforms to improve the legal and regulatory basis for close-out netting which is fundamental for the development of well-functioning derivatives markets. The TA also supports Operational Priority 6: Strengthening Governance and Institutional Capacity by strengthening the quality and capacity of public institutions to undertake policy reforms and promote private sector development, and Operational Priority 7: Fostering Regional Cooperation and Integration by strengthening regional financial sector regulations and promoting measures to harmonize cross-border transactions. It also aligns with international commitments and principles for financial stability.
Project Rationale and Linkage to Country/Regional Strategy A well-functioning derivatives market reduces credit risk, enhances liquidity in local capital markets, increases access to international market participants and provides risk management for financial intermediaries and end users of financial markets. As an important mechanism of credit risk reduction, close-out netting underpins the development of well-functioning derivatives markets. It has the economic advantage of contributing to greater liquidity in financial transactions, as less capital is required to be held against counterparty exposures. Market participants in "clean netting" jurisdictions enjoy greater access to international derivatives markets. Consequently, market participants within a "clean netting" jurisdiction have lower cost of funding relative to those in non-netting jurisdictions. The use of international standard contracts which confirms the netting of outstanding transactions and the financial collateral arrangements which support their operations, builds on the legal pillar of close-out netting and further contributes to greater liquidity in financial transactions within and across borders.
Impact Impact(s) the TA is aligned with increased access to international capital markets and domestic resource mobilization.
Project Outcome
Description of Outcome Legal and regulatory environment for close-out netting in selected DMCs improved.
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Awareness-raising and capacity building on close-out netting in derivatives transactions delivered.

Capacity building on the use of international standard contracts in financial markets delivered.

Legal and regulatory reform for close-out netting supported.

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Indonesia - Nation-wide; Uzbekistan - Nation-wide
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer McBride, Nicholas
Responsible ADB Department Office of the General Counsel
Responsible ADB Division Office of the General Counsel
Executing Agencies
Asian Development Bank
6 ADB Avenue,
Mandaluyong City 1550, Philippines
Timetable
Concept Clearance -
Fact Finding -
MRM -
Approval 29 Dec 2020
Last Review Mission -
Last PDS Update 29 Dec 2020

TA 6709-REG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Dec 2020 - 29 Dec 2020 31 Dec 2022 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
225,000.00 0.00 0.00 0.00 0.00 0.00 225,000.00 29 Dec 2020 0.00

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