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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Laws
Rulebook Modules
Prudential — Investment, Insurance Intermediation and Banking Module (PIB) [VER33/02-19]
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  Versions
(1 version)
 
Dec 9 2012 onwards

PIB 4.13.8



Whole Section PDF

The definitive version of DFSA handbook text is the PDF version as that is the text of the instrument as made and published by the DFSA.

To view past versions of this module in PDF format, please visit the Archive.

An Authorised FirmG must ensure that the following requirements are complied with before it recognises the effects of Credit RiskG mitigation of any CollateralG :

(a) the legal mechanism by which CollateralG is pledged, assigned or transferred must confer on the Authorised FirmG the right to liquidate or take legal possession of the CollateralG , in a timely manner, in the event of the default, insolvency or bankruptcy (or one or more otherwise-defined credit events set out in the transaction documentation) of the CounterpartyG (and, where applicable, of the custodian holding the CollateralG );
(b) the Authorised FirmG has taken all steps necessary to fulfil those requirements under the law applicable to the Authorised Firm'sG interest in the CollateralG for obtaining and maintaining an enforceable security interest by registering it with a registrar or for exercising a right to net or set off in relation to title transfer CollateralG ;
(c) the credit quality of the CounterpartyG and the value of the CollateralG do not have a material positive correlation;
(d) securities issued by the CounterpartyG or any Closely RelatedG CounterpartyG are not eligible;
(e) the Authorised FirmG has implemented procedures for the timely liquidation of CollateralG to ensure that any legal conditions required for declaring default of CounterpartyG and liquidating the CollateralG are observed, and that the CollateralG can be liquidated promptly; and
(f) where the CollateralG is held by a custodian, the Authorised FirmG has taken reasonable steps to ensure that the custodian segregates the CollateralG from its own assets.
Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]