Uganda is set to take a key step towards ensuring the
enforceability of close-out netting under ISDA, GMRA and GMSLA
contracts – at least in respect of financial institutions
governed by the Financial Institutions Act. This follows a recent
meeting hosted by Bank of Uganda
(“BOU”) to discuss draft regulations
titled “The Financial Institutions (Preference and Appraised
Book Value) Regulations 2021”. The participants at the
meeting included the leading financial institutions and market
players as well representatives from the International Capital
Markets Association (“ICMA”).
Netting is the mechanism that allows participants in the
derivatives, securities lending and repo markets to set-off their
mutual obligations with a counterparty that has become the subject
of an insolvency-type proceeding. Up to now, although automatic
early termination would be enforceable as a matter of contract law,
the Act voids transfers, made within 6 months of a management
takeover (or
