Regulatory Alerts2021-02-04
Notice No. 01/GBM/2021, of 4 February - Regulation of Over-the-Counter Financial Derivatives Not Cleared by a Central Counterparty
The Bank of Mozambique issued Notice No. 01/GBM/2021 to approve the Regulation governing Over-the-Counter (OTC) financial derivatives not cleared by a central counterparty, establishing comprehensive rules for risk hedging and treasury management directly tied to eligible counterparties' business activities. The regulation mandates strict eligibility criteria, mandatory initial and variation margin postings, transaction authorization procedures, and rigorous risk mitigation, documentation, and reporting obligations to enhance market transparency and reduce systemic risk. It further defines key financial terms, sets pricing and currency standards, and stipulates penalties for non-compliance while repealing specific provisions of prior notices.