22 September 2016

KWM cross-border team advises ISDA on its first China Collateral Memorandum

King & Wood Mallesons (KWM) has advised the International Swaps and Derivatives Association (ISDA) on the recent publication of the ISDA 2016 China Collateral Memorandum to assist market participants in navigating the legal issues involved in exchanging collateral with a counterparty in China. The ISDA 2016 China Collateral Memorandum analyses the enforceability of collateral rights contained in ISDA credit support documentation under Chinese law.

The cross-border KWM team comprises our derivatives, finance and bankruptcy teams across the network from China, Hong Kong and Australia. The key partners involved in this project include Minny Siu and Richard Mazzochi of our Hong Kong team, and China partners Robert Chen, Stanley Zhou, James Guan and Daryl Hao. In Australia, derivatives specialist Scott Farrell also assisted in the development of the memorandum.

Commenting on the development, Hong Kong partner Minny Siu said, “We are delighted to have been able to assist ISDA in facilitating market participants’ understanding of the Chinese legal issues in analyzing collateral arrangements under the ISDA credit support documentation. We have worked closely with ISDA and its members, drawing on expertise across the KWM network over a number of months to complete this important project.”

China partner Stanley Zhou said, “We feel honoured to support ISDA as Chinese lawyer team on the China Collateral Memorandum development, providing guidance to the participants in China for their engagement in the market. The project not only proves our in-depth understanding to the China finance market and wide experience, but also reflects the client’s recognition to our strong international platform and first-class service.”

The publication of the China Collateral Memorandum follows the rollout of new margin requirements for non-cleared derivatives in some jurisdictions on September 1. Developed by the Basel Committee on Banking Supervision and International Organisation of Securities Commissions, the margin framework is expected to be implemented in other jurisdictions over time.

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