Regulatory Alerts2020-02-14 | FAQ No. 01 of 2020Central Bank of Sri Lanka FAQs on Banking Act Directions No. 04 of 2018 for Financial Derivative Transactions
The Central Bank of Sri Lanka issued these FAQs to clarify Banking Act Directions No. 04 of 2018 governing financial derivative transactions for licensed commercial and specialized banks. The guidance mandates valid underlying transactions for non-interbank derivatives, permits End User and Non-Market Maker deals with foreign counterparties while prohibiting Derivative Market Maker Deals, and waives specific regulatory approval for Credit Support Annex transfers. Additionally, the document allows historical rate rollovers for FX forward contracts during the pandemic and permits banks to pay marked-to-market gains to customers holding government securities.
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