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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Rulebook Modules
Prudential — Investment, Insurance Intermediation and Banking Module (PIB) [VER33/02-19]
Sourcebook Modules
Consultation Papers
Policy Statements
DFSA Codes of Practice
Amendments to Legislation
Media Releases
Financial Markets Tribunal

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(1 version)
Dec 9 2012 onwards

PIB A6.1.1

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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.

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(1) An Authorised FirmG which uses the Basic Indicator ApproachG must calculate its Operational RiskG Capital RequirementG equal to the average over the previous three years of a fixed percentage (denoted alpha) of positive annual gross income.
(2) In (1), if the figure for annual gross income in any of the previous three years is zero or negative an Authorised FirmG must exclude such amounts from the calculation of the average.
(3) The Operational RiskG Capital RequirementG in (1) must be calculated according to the following formula:

KBIA = [Σ(GI1...n Xα)] / n


KKIA = the Operational RiskG Capital RequirementG under the Basic Indicator ApproachG

GI = the gross annual income, where positive, over the previous three years

n = number of the previous three years for which gross income is positive

α = 15%,
(4) For the purpose of (1), "gross income" is net interest income plus net non-interest income and must:
(a) be gross of any provisions (e.g. for unpaid interest);
(b) be gross of operating expenses, including fees paid to outsourcing service providers;
(c) exclude realised profits/losses from the sale of SecuritiesG in the Non-Trading BookG ; and
(d) exclude extraordinary or irregular items as well as income derived from insurance recoveries.
Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]