Circular No. 03/EMO/2021, of April 15 - Fundamental Information Document for OTC Derivatives

Bank of Mozambique
Administration

MONETARY STABILITY DEPARTMENT
CIRCULAR NO. 03/EMO/2021

Maputo, April 15, 2021

SUBJECT: FUNDAMENTAL INFORMATION DOCUMENT FOR OTC DERIVATIVES

The Regulation on Financial Derivatives of the Un-cleared Over-the-Counter Market by a Central Counterparty provides that the Bank of Mozambique shall establish the model for the fundamental information document.

Accordingly, under the provisions of paragraph 2 of Article 14 of the Regulation on Financial Derivatives of the Un-cleared Over-the-Counter Market by a Central Counterparty, approved by Notice No. 1/GBM/2021, of March 16, the Bank of Mozambique establishes:

FUNDAMENTAL INFORMATION DOCUMENT
1. PURPOSE OF THE TRANSACTION
To provide counterparties with fundamental information on the risk hedging product.
2. PRODUCT CHARACTERISTICS
Product Name
Product Type
Objective
Product Term
3. RISKS AND RETURNS
The financial counterparty must describe, among other things:
• the risk profile of the product;
• the risk level of the product to be transacted, when compared with other products; and

*

Bank of Mozambique
Administration

• the likelihood of the product suffering financial losses in the future due to adverse market factors or the issuer's inability to honor its commitment.
4. MEASURES IN CASE OF DEFAULT
Describe all measures to be taken in the event of a default (default) by counterparties.
(...)
5. COMPLAINT MECHANISMS
(...)
6. OTHER RELEVANT INFORMATION
Describe the set of information that the financial counterparty considers relevant to include in the document and that reinforces transparency and a better understanding of the product.

Any doubts arising from the interpretation and application of this Circular shall be clarified by the Market and Reserve Management Department of the Bank of Mozambique.

This Circular enters into force on April 16, 2021.

BANK OF MOZAMBIQUE
Monetary Stability
Department

Silvina de Abreu
Administrator