Document background
The Master Netting Agreement is essential for financial institutions and corporations operating in Saudi Arabia who engage in multiple financial transactions with the same counterparty. This document provides a crucial legal framework for reducing credit risk and capital requirements by allowing the offset of positive and negative exposures into a single net amount, particularly important in default scenarios. The agreement must be carefully structured to ensure compliance with Saudi Arabian law, including Sharia principles, while maintaining alignment with international netting practices. It typically covers various financial transactions including derivatives, securities lending, and repurchase agreements, and must meet the regulatory requirements set by the Saudi Arabian Monetary Authority (SAMA). The document is particularly relevant in the context of Saudi Arabia's growing financial markets and the Kingdom's Vision 2030 economic transformation program.
