Dubai FSA published the new Recovery and Resolution (RAR) module of the Dubai FSA Rulebook. An authorized firm is required to prepare and submit a recovery plan to Dubai FSA if the firm is included in a class of authorized firms that are required to prepare and submit such a plan or if the firm is not included in such a class but has received the Dubai FSA notice requiring the firm to prepare a plan. Dubai FSA is also consulting on changes to the leverage ratio to reflect changes introduced by the respective BCBS standard in 2017. Dubai FSA is proposing changes with respect to minimum leverage ratio, exposure measure, unsettled transactions and cash pooling, collateral and cash variation margin, clearing services, and written credit derivatives. The deadline for providing comments on this consultation is June 26, 2021.
In the leverage ratio consultation, Dubai FSA proposed to:
- adopt the BCBS minimum leverage ratio level of 3% and require firms to report breaches promptly to Dubai FSA.
- adopt a minimum leverage ratio for globally systemically important banks (G-SIBs) set at 3%, plus 50% of the additional higher loss absorbency risk-weighted capital requirement that is assigned under the G-SIB framework.
- adopt a minimum leverage ratio of 3.5% for firms that are designated as domestic systemically important banks (D-SIBs) by Dubai FSA.
- clarify the treatment of exposures that have been already deducted from tier 1 capital by explicitly allowing a firm to exclude such exposures from the leverage ratio exposure measure.
- not allow the treatment of unsettled transactions and cash pooling under the BCBS standard to be used for leverage ratio calculation under the Dubai FSA rules.
- clarify the treatment of collateral posted and received against derivative positions for determining the leverage ratio exposure measure. (A firm should not net collateral received against the derivative position whether or not netting is allowed and a firm needs to gross up the leverage ratio exposure measure by the amount of the collateral posted against a derivative position, if posting of such collateral has reduced the value of Balance Sheet assets under the accounting standards.)
- not allow offset of variation margin against the exposure position for leverage ratio calculation.
- include trade exposures in the leverage ratio exposure measure where the clearing member has provided a guarantee or contractual commitment and to include this in the Prudential—Investment, Insurance Intermediation And Banking Business Module (PIB) module.
- include the notional amount of the credit derivative in the leverage ratio exposure measure (for firms writing credit derivatives) and not reduce the notional amount of written credit protection using the credit protection that was bought.
Additionally, Dubai FSA is consulting (paper No 140) on various policy proposals that will result in changes to the Dubai FSA Rulebook and the Regulatory Law. Dubai FSA is proposing amendments to General (GEN) Module, Anti-Money Laundering, Counter-Terrorist Financing and Sanctions (AML) Module, PIB Module, and Collective Investment Rules (CIR) Module of the Dubai FSA Rulebook. The proposals in the consultation paper also include updates of cross-references and correction of other errors in the Dubai FSA Rulebook. The deadline for providing comments on this consultation is May 26, 2021.
- Recovery and Resolution Module
- Consultation on Leverage Ratio
- Consultation on Other Rulebook Changes
Comment Due Date: June 26, 2021 (Leverage Ratio)/May 26, 2021 (Others)
Keywords: Middle East and Africa, United Arab Emirates, Dubai, Banking, Rulebook, Resolution Planning, Basel, Leverage Ratio, Regulatory Capital, BCBS, Dubai FSA
Previous ArticlePRA Provides Updated Guidance on COVID-19 Disclosures by Banks in UK
Next ArticleEC Adopts Package of Sustainable Finance Measures
The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
The European Insurance and Occupational Pensions Authority (EIOPA) published a report assessing insurers' exposure to physical climate change risks
The European Commission (EC) published the results of a public consultation, held in October 2021, on the review of the Web Accessibility Directive.
The Network for Greening the Financial System (NGFS) published two reports to aid central banks and regulators in their oversight of the financial sector and in their central bank operations
The Monetary Authority of Singapore (MAS) and the SC-STS are jointly consulting, until June 10, 2022, on setting adjustment spreads for the conversion of legacy SOR contracts to SORA reference rate.
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.