The objective is to obtain a net amount of debt after clearing of exposures and security and to obtain a supplementary amount reflecting possible changes in the prices of the securities participating in the transactions and, if necessary, foreign exchange risk. The short or short net position of each security in the compensation agreement is multiplied by the corresponding haircut. All other rules for calculating haircuts mentioned in LE CRE22.40 at CRE22.68 apply to banks that use bilateral clearing agreements for re boarding operations. The compensation law makes compensation agreements final and enforceable against an insolvent party or a person who provides security to support the insolvent party. A party`s obligations to pay under a clearing contract are not cancelled or suspended due to bankruptcy or insolvency proceedings or the appointment of a liquidator in respect of that party, and any compensation agreement enters into force in accordance with its terms. Within the United Arab Emirates, compensation laws have been adopted and are in effect in the Dubai International Financial Centre (IFLD) and Abu Dhabi Global Market (ADGM) free zones. However, outside these financial free zones, the legal basis for compensation in the United Arab Emirates was based on less precise legal bases. For example, in an insolvency scenario, parties based in the United Arab Emirates could invoke the provisions of Federal Insolvency Act 2016 2016, but only for those who crystallized before the insolvency proceedings began. Banks must ensure that sufficient resources are allocated to the orderly resolution of margin agreements with OTC derivatives and securities financing counterparties, depending on the news and accuracy of their outgoing calls and the response time to incoming calls. Banks must have a security management policy to monitor, monitor and report: „… the provisions of the compensation law may predominate over the concept of Gharar. When banks have legally enforceable clearing arrangements for loans and deposits, they can calculate capital requirements on the basis of net credit receivables subject to the terms set out in CRE22.82 and CRE22.83.
is still in a position to determine assets and liabilities with the same consideration that are subject to the compensation agreement; Prior to the introduction of the Compensation Act, the use of derivative contracts by financial institutions was commonplace. However, the final analysis of the United Arab Emirates, which was the basis of these agreements, contained a number of qualifications, which meant that the United Arab Emirates could not be considered a jurisdiction in which the applicability of compensation was certain. There was even a case of basic precision that found derivative contracts to be unenforceable.