In order to clarify the enforceability of the relevant contents of net settlement in the rules for the measurement of assets at risk of default of derivatives counterparties under China's legal and regulatory framework, China Banking and Insurance Regulatory Commission recently issued the notice on issues related to the rules for the measurement of assets at risk of default of derivatives counterparties (hereinafter referred to as the notice), It means that eligible commercial banks can calculate the counterparty risk exposure of derivative instruments and withdraw capital on a net basis. The person in charge of relevant departments of the cbcirc said that this will help to improve the efficiency of derivatives trading, reduce the risk exposure and capital occupation of commercial banks, and improve the overall stability of the market by reducing the credit risk of counterparties, which is of great significance for the basic system construction and long-term development of the domestic derivatives market. Specifically, the notice specifies that the counterparties of commercial banks to which the Notice applies are financial institutions established with the approval of China's financial supervision and administration department, and the recognition standard of net settlement portfolio between commercial banks and other counterparties is still implemented in accordance with the requirements of the rules for the measurement of default risk assets of derivative counterparties. At the same time, the notice incorporates the master agreement on financial derivatives trading in China's inter-bank market, the master agreement on derivatives trading in China's securities and futures market, and the 2002 master agreement of the International Swaps and Derivatives Association, which are commonly used in the international market, and adopts "other legal and effective Master Agreements for net settlement recognized by the CBRC" Reserve policy space for the expression of. Referring to the impact of the notice on commercial banks and China's derivatives market, the relevant person in charge of the cbcirc said that commercial banks manage their risk exposure with net amount, which can reduce the scale of collateral and settlement funds for daily transactions, so as to improve the efficiency of derivatives transactions and reduce default risk exposure and capital occupation. In case of counterparty default or bankruptcy, compared with full bilateral settlement, net settlement can lock in risk exposure and control transaction risk more quickly. At the same time, the termination of net settlement can effectively reduce the risk contagion caused by the default of a single market subject, reduce systemic risks, and improve the efficiency and stability of the whole market, which is of great significance for the basic system construction and long-term development of the derivatives market. Clarifying the termination of net settlement is conducive to clarifying the disposal rules of derivatives transactions, stabilizing market expectations and orderly risk disposal of commercial banks. In addition, clarifying the support for netting in the capital supervision rules can lay a foundation for further improving the derivatives market system at the legislative level, and promote the early recognition of China as a netting jurisdiction in the international market, which is conducive to the fair competition of Chinese and foreign banks in the international market. It is reported that in the next step, the CBRC will do a good job in the overall connection with the notice in the revision process of the capital management measures of commercial banks (for Trial Implementation), and will continue to promote the further clarification and improvement of the termination net settlement system at the legal level. (outlook new era)