Norton Rose Fulbright’s Dar-es-Salaam office this month assisted the International Swaps and Derivatives Association Inc. (ISDA) with a country update on the laws which relate to the trading of over-the-counter derivatives in Tanzania. A full copy of the Tanzania update prepared by Norton Rose Fulbright can be found via the ISDA website (click here).
The update primarily looks at netting and insolvency laws, but also focuses on the new February 2015 restrictions that apply to Tanzanian shilling denominated derivative transactions. In particular swaps and forwards where one of the currencies is the Tanzanian shilling can only be undertaken by licensed banks and financial institutions if there is evidence of an underlying economic activity.
Further, licensed banks and financial institutions are restricted from entering into swaps of less than three months duration with non-residents, and with residents that are less than seven days duration. Banks and financial institutions are required to report all derivative transactions to the Bank of Tanzania on a daily basis.