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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Recognised Jurisdictions and Funds
Declaration Notices
Financial Markets Tribunal
Rulebook Modules
Prudential — Investment, Insurance Intermediation and Banking Module (PIB) [VER34/12-19]
Sourcebook Modules
Consultation Papers
Policy Statements
DFSA Codes of Practice
Amendments to Legislation
Media Releases

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PIB 9.2.5 Guidance

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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.

1. An Authorised FirmG , in measuring its Liquidity RiskG under PIB Rule 9.2.5 should ensure that:
(a) the variety of time horizons cover changes in liquidity needs and funding capacity on an intra-day, daily, short-term, medium-term and long–term basis;
(b) it considers the vulnerabilities of cash flows to events, activities and business strategies;
(c) its dynamic cash flow forecasts are carried out at a sufficiently detailed level and include assumptions on the actions of key counterparties in response to changes in operating conditions;
(d) cash flows in all significant foreign currencies are measured on an aggregate basis, as well as at the individual currency level, taking into account stressed conditions affecting foreign exchange markets;
(e) it captures the impact of providing correspondent, custody and settlement activities on cash flows; and
(f) assumptions used to determine future liquidity and funding needs are realistic and reflect the complexities of the underlying businesses, products and markets.
2. Early warning indicators should be designed to assist the Authorised FirmG to identify any negative trends in its liquidity position and to assist its management to assess and respond to mitigate its exposure to those trends.
3. Management information should include the following:
a. a cash-flow or funding gap report on an aggregate basis and by currency, legal entity and country;
b. a funding maturity schedule;
c. a list of large providers of funding;
d. reports on Collateral and encumbered assets to enable compliance with PIB Rule 9.2.8;
e. a liquidity costs, benefits and risks allocation report to assist compliance with PIB Rule 9.2.9;
f. intra-day liquidity reports to assist compliance with PIB Rule 9.2.10;
g. where appropriate, a schedule of Islamic fundingG sources;
h. a limit monitoring and exception report;
i. asset quality and trends;
j. earnings projections; and
k. the Authorised Firm'sG reputation in the market and the condition of the market itself.
4.An Authorised FirmG should be able to generate critical liquidity reports on a daily basis, including in times of stress.
5.Where an Authorised FirmG is a member of a GroupG , it should be able to assess the potential impact on it of Liquidity RiskG arising in other parts of the GroupG .
6. Where an Authorised FirmG has subsidiaries or branches, it should be able to monitor and control Liquidity RiskG at the individual branch or subsidiary level and on a consolidated level taking into account legal, operational, regulatory, reputational and other relevant constraints.
Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
[Amended] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]
[Amended] DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]