Regulatory Alerts2017-11-29 | Banking Act Directions No. 6 of 2017Financial Derivative Transactions for Licensed Commercial and Specialised Banks
The Monetary Board of the Central Bank of Sri Lanka issued Banking Act Directions No. 06 of 2017 to regulate financial derivative transactions for licensed commercial and specialised banks. The directive mandates board-approved risk management frameworks, permits specific hedging instruments like swaps and options for non-speculative purposes, and requires banks to execute back-to-back transactions with foreign counterparties while maintaining a maximum ten-year maturity. Additionally, it enforces strict customer awareness protocols, ISDA master agreements or written consents, and monthly reporting to the International Operations Department.
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