In 2015, the Ministerial Council for Services approved the drafting of a federal law on ‘netting’ aimed at regulating contracts and transactions in line with international best practices. Enshrining close-out netting into UAE federal legislation would improve the stability of financial markets in the UAE, increase the availability of credit to, and reduce costs for, UAE entities and support the UAE’s commitment to adopt international standards and best practices.
In 2016, the UAE Central Bank has supported the proposal of UBF regarding ‘close-out netting’, the process whereby counterparties who have a number of obligations to each other, can agree to offset and net those obligations in order to reduce exposure and therefore risk between two counterparties.
The UAE's new Netting Law (Federal Law No. 10 of 2018) (the Federal Netting Law) was issued in September 2018. The Federal Netting Law allows for the recognition of netting agreements, close out netting provisions and related collateral arrangements, particularly in an insolvency scenario.