Mauritania Takes the First Step Toward the Adoption of Close-Out Netting

The government of the Islamic Republic of Mauritania just approved a draft law creating a close-out netting regime for financial transactions.

On August 29, 2024, the government of Mauritania approved the creation of a legal framework for close-out netting, which will help provide businesses with effective tools for hedging risks (e.g., market risk, interest rates risk, counterparty risk). The draft legislation on close-out netting was drawn up by Jones Day who advised major Mauritanian stakeholders in relation to this project. It is part of a wider project driven by the Central Bank of Mauritania aimed at fundamentally reforming the organization and supervision of Mauritania's banking and financial markets. The new close-out netting regime will consist of around 10 articles.

This reform sets out a comprehensive and ambitious framework that will bring Mauritanian law up to the highest standards of international markets and will provide for the enforceability of contractual provisions allowing for the termination and netting of financial transactions in case of default of a counterparty, including where insolvency proceedings are opened. This regime applies to derivatives transactions, repurchase transactions, securities lending transactions, and FX spot transactions. The draft law also includes provisions for the protection of collateral in such derivatives transactions and introduces rules relating to the tax and accounting treatment of full-title transfers of collateral.

The draft law is expected to be submitted to the Parliament of Mauritania at the next parliamentary session.

The draft legislation on close-out netting was drawn up by Jones Day who advised major Mauritanian stakeholders in relation to this project.