Russian derivatives regulations – developments and remaining challenges Andrei Murygin Partner 10...
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![Page 1: Russian derivatives regulations – developments and remaining challenges Andrei Murygin Partner 10 September 2013.](https://reader036.fdocuments.us/reader036/viewer/2022083004/56649dc65503460f94aba2d0/html5/thumbnails/1.jpg)
Russian derivatives regulations – developments and remaining challenges
Andrei Murygin
Partner
10 September 2013
![Page 2: Russian derivatives regulations – developments and remaining challenges Andrei Murygin Partner 10 September 2013.](https://reader036.fdocuments.us/reader036/viewer/2022083004/56649dc65503460f94aba2d0/html5/thumbnails/2.jpg)
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Repositories – reporting and close-out netting
― NSD and NP RTS announced availability of reporting facilities for repos and FX swaps – reportable from 5 November 2013
― Impact: close out netting will become available for repos and swaps
― Announcement of reporting facility for DFIs and “other agreements involving securities and foreign currency” expected before November 2013
― Works as extension of transition period for reporting of derivatives and spot trades until July 2014
― Close out netting for derivatives will effectively be postponed too, unless both parties agree to report before statutory obligation arises
― Foreign banks’ reporting obligation – applicable?
![Page 3: Russian derivatives regulations – developments and remaining challenges Andrei Murygin Partner 10 September 2013.](https://reader036.fdocuments.us/reader036/viewer/2022083004/56649dc65503460f94aba2d0/html5/thumbnails/3.jpg)
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Collateral
― “Contracts for payment of floating margin amounts” are included in the basic DFI list in the 2011 Russian Master Derivatives Documentation;
― 2011 Form of Margin Agreement - collateral is treated as a separate derivatives transaction
― FSFM proposes adding Credit Support Agreements into the list of DFIs
― Improves chances of inclusion of collateral in Close out Amount;
― Does it improve enforceability of collateral in the absence of statutory recognition of margin payments in the SML?
― Civil Code or SML changes necessary: timing unclear
![Page 4: Russian derivatives regulations – developments and remaining challenges Andrei Murygin Partner 10 September 2013.](https://reader036.fdocuments.us/reader036/viewer/2022083004/56649dc65503460f94aba2d0/html5/thumbnails/4.jpg)
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Curing discrimination of foreign players - Civil code changes needed
― Article 1062 (2) : change is needed to ensure equal protection of derivatives with non-Russian professional counterparties
― November 2012 – Duma indefinitely postponed the proposed changes to the Civil Code
― Timing of such changes is uncertain
![Page 5: Russian derivatives regulations – developments and remaining challenges Andrei Murygin Partner 10 September 2013.](https://reader036.fdocuments.us/reader036/viewer/2022083004/56649dc65503460f94aba2d0/html5/thumbnails/5.jpg)
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Court practice – adverse cases
― Unicredit case – 2013 repeat case of 2012 loss
― Easy fix: specific termination clauses can be dealt with in the documentation
― Larger impact: unpredictable interpretation of international-style provisions of Russian and ISDA derivatives documentation
― VAS discussions of possible clarifications on derivatives
― Possibility of adding termination if a professional party acted in bad faith
― Possibility of professional party’s disclosure obligation and suitability tests
![Page 6: Russian derivatives regulations – developments and remaining challenges Andrei Murygin Partner 10 September 2013.](https://reader036.fdocuments.us/reader036/viewer/2022083004/56649dc65503460f94aba2d0/html5/thumbnails/6.jpg)
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Questions
?