- December 13, 2020
- Posted by: samdenis
The introduction of the Act confers benefits on reducing credit risk by giving counterparties the opportunity to reject credit exposures instead of having gross liabilities, thereby improving the operational efficiency of the financial system by reducing systemic risks. (b) an order that imposes compensation provisions for your agreement. LEGAL IMPEDIMENTS Despite all efforts to ensure the legal certainty of the applicability of the law, there are several barriers to closure compensation, which are described in Section 29A3 and Section 414 of the Pengurusan Danaharta Nasional Berhad Act 1998 and Section 346C5 of the Capital Markets and Services Act 2007. The compensation law highlights the long-standing uncertainty about the applicability of “close-out netting” as a result of laws interpreted by the market as unfriendly. These are: ((i) Sections 29A and 41 of the Pengurusan Danaharta Nasional Berhad Act 1998 (Danaharta Act), which provide that the appointment of a special administrator cannot give rise to a right of termination or acceleration, and impose a 12-month moratorium during which the compensation period is limited, except with the Danaharta agreement; and (ii) Section 346C of the Capital Market and Services Act 2007 (CMSA), which empowers the Securities and Exchange Commission to require anyone to take whatever steps the Commission deems necessary to manage systemic risk. The regulations detail how net income will be calculated as of January 1, 2015 when goods or services are new or for sale. The regulations also provided detailed formulas to determine whether the net profit margin for goods or services increased within the specified time frame. PERIOD OF STAY Although compensation is a good risk management mechanism, the exercise of compensation for a troubled financial institution can create challenges, so a brief stay of the preventive compensation mechanism is necessary to enable the competent authorities to decide whether this institution should be resolved and how it should be resolved. In such cases, the Act gives the Minister of Finance the power to impose a stay term for the closing compensation rights in accordance with the Law, in accordance with the provisions of Part II of the calendar, i.e. subsections 115 (3) and 180 (1) of the Malaysia Deposit Insurance Corporation Act 2011; 209, paragraph 2, of the Financial Services Act 2013; 220, paragraph 2, of the Islamic Financial Services Act 2013; and Section 41 of the Pengurusan Danaharta Nasional Berhad Act 1998.
The Financial Compensation Act 2015 comes into force today. The law provides a legal framework for the closure of financial transactions in Malaysia, which is in line with international practices. Close-out netting is an important risk management mechanism used by financial institutions and other financial market players for derivatives and repurchase transactions. The law ensures that the financial transaction clearing mechanism is applicable under the law. The applicability of offsets at the opening of the close-out will provide benefits for reducing credit risk, as counterparties can, instead of having a gross risk, reduce operational efficiency and reduce systemic risk to the financial system.