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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]
Sourcebook Modules
Consultation Papers
Policy Statements
DFSA Codes of Practice
Amendments to Legislation
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Financial Markets Tribunal
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  • PIB 1 Application, Interpretation and Categorisation

    • PIB 1.1 Application

    • PIB 1.2 Glossary for PIB

      • PIB 1.2 Guidance

        Set out under PIB Rule 1.2.1 are a number of mainly technical definitions used solely in PIBG . Such definitions do not also appear in GLOG unless they are used elsewhere in the RulebookG . GLOG also contains definitions of abbreviations, terms and phrases used in PIBG and those are also included in PIB 1.2.1 for convenience purposes where such definitions are embedded in PIBG specific definitions. Commonly used definitions such as "Authorised FirmsG ", "Domestic FirmsG ", and "Financial ServicesG " appear only in GLOG .

        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • PIB 1.2.1

        The following terms and abbreviations bear the following meanings for the purpose of this module:

        Alternative Standardised ApproachG The manner in which the Operation RiskG Capital RequirementG is calculated in accordance with sections PIB 6.11 and PIB A6.3.
        Annual Audited ExpenditureG The expenditure calculated in accordance with PIB Rule 3.7.3.
        Asset-Backed Commercial PaperG (ABCPG ) Programme A programme that predominately issues commercial paper with an Original MaturityG of one year or less that is backed by assets or other ExposuresG held in a bankruptcy-remote SPE.
        AT1 Additional tier 1
        AT1 Capital Has the meaning given in PIB section 3.14.
        Available Stable Funding (ASF) The amount, calculated in accordance with PIB Rule A9.4.1, representing the relative stability of an Authorised Firm'sG available funding sources.
        ASF Category The applicable category, listed in the table to PIB Rule A9.4.1, to which the carrying value of a liability or capital instrument of an Authorised FirmG is assigned.
        ASF Factor The applicable factor, listed in the table to PIB Rule A9.4.1, used to multiply the carrying value of a liability or capital instrument of an Authorised FirmG .
        Base Capital RequirementG Has the meaning given in PIB section 3.6.
        Basel Committee The Basel CommitteeG on Banking SupervisionG .
        Basic Indicator ApproachG The manner in which the Operational RiskG Capital RequirementG is calculated in accordance with sections PIB 6.11 and PIB A6.1.
        Capital Buffer In relation to an Authorised FirmG , means the sum of the following (to the extent applicable to the firm):
        (a) Capital Conservation BufferG ;
        (b) Countercyclical Capital BufferG ; and
        (c) HLA Capital BufferG .
        Capital Buffer Requirement Means a requirement to maintain any one or more of the following:
        (a) Capital Conservation BufferG ;
        (b) Countercyclical Capital BufferG ; or
        (c) an HLA Capital BufferG .
        Capital Conservation Buffer The Capital BufferG that an Authorised FirmG must maintain under section 3.9.
        Capital Conservation Buffer Requirement The requirement to maintain a Capital Conservation Buffer under section 3.9.
        Capital RequirementG The amount of capital an Authorised FirmG must hold, calculated in accordance with sections PIB 3.3, PIB 3.4, PIB 3.5, PIB 3.9, PIB 3.9A or PIB 3.9B as applicable.
        Capital ResourcesG The total Capital ResourcesG of an Authorised FirmG calculated in accordance with PIB section 3.11.
        CategoryG A prudential grouping of Authorised FirmsG which determines the application of the RulesG in this Module.
        CCF Credit conversion factor
        CCP Central CounterpartyG
        CEAG Credit equivalent amountG
        CET1 Common equity tier 1
        CET1 Capital Has the meaning given in PIB section 3.13.
        Clean-Up CallG An option that permits the SE ExposuresG (e.g. asset-backed SecuritiesG ) to be called before all of the underlying ExposuresG or SE ExposuresG have been repaid. In the case of Traditional SecuritisationsG , this is generally accomplished by repurchasing the remaining SE ExposuresG once the pool balance or outstanding SecuritiesG have fallen below some specified level. In the case of a synthetic ExposureG , the Clean-Up CallG may take the form of a clause that extinguishes the credit protection.
        Close LinksG A PersonG (PersonG A) has Close LinksG with a PersonG (PersonG B) if:
        (a) PersonG B:
        (i) is a Holding CompanyG of PersonG A;
        (ii) is a SubsidiaryG of PersonG A;
        (iii) is a Holding CompanyG of the SubsidiaryG of PersonG A;
        (iv) is a SubsidiaryG of a Holding CompanyG of PersonG A; or
        (v) owns and controls 20% or more of the voting rights or shares of PersonG A; or
        (b) PersonG A owns and controls 20% or more of the voting rights or shares of PersonG B.
        Closely RelatedG Has the meaning given in PIB Rule A4.11.5.
        CollateralG Any form of asset, guarantee, or indemnity which is held or controlled by an Authorised FirmG and is subject to a security interest or arrangement in favour of that firm.
        Collective Investment FundG Risk Capital RequirementG A component of Market Risk Capital RequirementG calculated in accordance with PIB section 5.9.
        Commodities Risk Capital RequirementG A component of the Market Risk Capital RequirementG to cover the risk of holding or taking positions in commodities, including precious metals, but excluding gold, calculated in accordance with PIB section 5.7.
        Concentration RiskG The risk faced by an Authorised FirmG arising out of its Large ExposuresG .
        ConnectedG In relation to a PersonG (A), a PersonG which has or has at any relevant time had the following relationship to A:
        (a) a member of A's GroupG ;
        (b) a ControllerG of A;
        (c) a member of a partnership of which A is a member;
        (d) an employee or former employee of A;
        (e) if A is a company:
        (i) an officer or manager of A or of a parent of A;
        (ii) an agent of A or of a parent of A;
        (f) if A is a partnership is or has been a member, manager or agent of A; or
        (g) if A is an unincorporated association of persons which is not a partnership, is or has been an officer, manager or agent of A.
        Connected CounterpartiesG Has the meaning given in PIB Rule A4.11.7.
        Contingency Funding Plan (CFP) The plan referred to in PIB Rule 9.2A.6.
        Controlled Early AmortisationG Early AmortisationG that meets the conditions in PIB Rule 4.14.58.
        Countercyclical Capital Buffer (CCyB) The countercyclical capital buffer that an Authorised FirmG must maintain under section 3.9A.
        CCyB Authority
        (1) For the StateG , means the Central BankG ; and
        (2) For any other jurisdiction, means the authority in that jurisdiction responsible for setting CCyB Rates.
        CCyB Rate A rate expressed as a percentage of Risk Weighted AssetsG that applies under PIB Rules 3.9A.7 to 3.9A.9.
        CCyB Requirement The requirement to maintain a Countercyclical Capital BufferG under PIB section 3.9A.
        CounterpartyG Means any person with or for whom an Authorised FirmG carries on, or intends to carry on, any regulated business or associated business. In this context, CounterpartyG includes an individual, unincorporated body, company, government, local authority or other public body.
        Counterparty RiskG The risk that an Authorised Firm'sG CounterpartyG does not perform its obligations under the terms of a contract.
        CR ExposureG The ExposureG value or amount for a Credit RiskG ExposureG .
        Credit DerivativeG Any contract which transfers the Credit RiskG of a reference obligation or set of reference obligations from the protection buyer to the protection seller, such that the protection seller has an ExposureG to the reference obligation(s).
        Credit EnhancementG A contractual arrangement in which the Authorised FirmG retains or assumes an SE ExposureG and, in substance, provides some degree of added protection to other parties to the transaction.
        Credit Quality GradeG A credit quality step in a credit quality assessment scale. A credit quality assessment scale is a scale onto the credit assessments of an ECAIG or an expert credit agency are mapped.
        Credit RiskG In relation to an Authorised FirmG , the risk of loss if another party fails to perform on its financial obligation to the Authorised FirmG .
        Credit Risk Capital Requirement (CRCOM)G The requirement calculated in accordance with PIB section 4.6.
        Credit-Enhancing Interest-Only StripG An on-balance sheet asset that:
        (i) represents a valuation of cash flows related to future margin income; and
        (ii) is subordinated.
        CRW Credit risk weight for an ExposureG .
        CV Contracted value for delivery.
        DeltaG The measure of an Option'sG sensitivity to a change in value of the underlying investment, asset or property.
        Displaced Commercial Risk Capital RequirementG The requirement calculated in accordance with IFR chapter 5.
        Domestic Systemically Important Bank (D-SIB) An Authorised FirmG designated by the DFSAG under PIB section 1.4 as a domestic systemically important bank.
        Duration MethodG A measure of General Market RiskG calculated in accordance with PIB Rule A5.2.19.
        E An ExposureG value or amount
        E* An ExposureG value or amount adjusted in the manner provided in the relevant RuleG
        EAE The ExposureG value or amount for an Early AmortisationG ExposureG
        Early AmortisationG A mechanism that, once triggered, allows investors to be paid out prior to the originally stated maturity of the securities issued. For risk-based capital purposes, an Early AmortisationG provision will be considered either controlled or non-controlled.
        ECAIG A CRA or an external credit rating agency approved by the DFSAG for the purpose of this Module.
        Equity Risk Capital RequirementG A component of Market Risk Capital RequirementG and calculated in accordance with PIB section 5.5.
        Evergreening Evergreening refers to the practice by some banks to roll over or renew their non-performing loans or potentially nonperforming loans, so that they can avoid recognising them as non-performing loans in their accounts and consequently avoid provisioning for them.
        Excess SpreadG Gross finance charge collections and other income received by the trust or SPE minus certificate interest, servicing fees, charge-offs, and other senior trust or SPE expenses.
        Expenditure Based Capital MinimumG A Capital RequirementG calculated in accordance with PIB section 3.7.
        ExposureG The maximum loss that an Authorised FirmG (and where applicable its PSIAG holders) might suffer if:
        (a) a CounterpartyG or a group of Connected CounterpartiesG fail to meet their obligations; or
        (b) it realises assets or off-balance sheet positions.
        An ExposureG also includes any asset or off-balance sheet item, which could result in a potential loss to the Authorised FirmG due to Market RiskG or Operational RiskG or any other risk factor.
        FCCA Financial CollateralG Comprehensive Approach as described in PIB Rule 4.9.5.
        FCSA Financial CollateralG Simplified ApproachG as described in PIB Rule 4.9.5.
        Financial GroupG A group of entities which includes an Authorised FirmG and:
        (a) any ParentG incorporated in the DIFCG ;
        (b) any Financial InstitutionG subsidiaries (whether direct or indirect) of the ParentG or ParentsG in (a) or of the Authorised FirmG ;
        (c) any Financial InstitutionG in which the ParentG or ParentsG in (a), the Financial InstitutionG subsidiaries in (b) or the Authorised FirmG (whether direct or indirect) hold 20% or more of the voting rights or capital; and
        (d) any entity which the DFSAG directs the Authorised FirmG to include in accordance with PIB Rule 8.1.2 or PIN Rule 8.1.2.
        Financial Group Capital RequirementG The Capital RequirementG of a Financial GroupG calculated in accordance with PIB Rule 8.3.3 or PIN Rule 8.3.3.
        Financial Group Capital ResourcesG The Capital ResourcesG of a Financial GroupG calculated in accordance with PIB Rule 8.3.4 or PIN 8.3.4.
        First Loss PositionG Represents the first level of support provided to the special purpose entity or vehicle that should bear all, or a significant part of, the risk associated with the items held by the special purpose entity or vehicle.
        Foreign Exchange Risk Capital RequirementG A component of the Market Risk Capital RequirementG and as calculated in accordance with PIB section 5.6.
        GammaG The measure of the rate of change of DeltaG .
        General Market RiskG
        (1) For the purposes of the Interest Rate Risk Capital RequirementG , means the risk that losses may arise from price changes in SecuritiesG caused by parallel or non-parallel shifts in the yield curve or from price movements in the equity market for a given country;
        (2) For the purposes of the Equity Risk Capital RequirementG , means the risk that losses may arise from a price movement in the equity market for a given country; or
        (3) For the purposes of internal models, means both of the above risks.
        Global Systemically Important Bank (G-SIB) An Authorised FirmG designated by the DFSAG under PIB section 1.4 as a global systemically important bank.
        GroupG Means a group of entities which includes an entity (the 'first entity') and:
        (a) any ParentG of the first entity; and
        (b) any subsidiaries (direct or indirect) of the ParentG or ParentsG in (a) or the first entity.
        Group RiskG The risk of loss to the Authorised FirmG as a result of its membership of, or linkages within a GroupG .
        High Quality Liquid Assets (HQLA) Liquid assets that meet the conditions in Rules PIB Rule A9.2.2 to PIB Rule A9.2.9 of App 9.
        HLA Capital Buffer A higher loss absorbency capital buffer that a SIB must maintain under PIB section 3.9B.
        HLA Capital Buffer Requirement The requirement to maintain a higher loss absorbency capital buffer under PIB section 3.9B.
        HLA Ratio In relation to a SIB, means the ratio determined by the DFSAG under PIB Rule 3.9B.6 for that SIB.
        ICR (Individual Capital Requirement) Individual capital requirement
        Implicit Support Arises when an Authorised FirmG provides support to a securitisation in excess of its predetermined contractual obligation.
        Individual Liquidity Requirement An individual liquidity requirement imposed by the DFSAG under PIB Rule 9.3.6.
        Interest Rate Risk Capital RequirementG A component of Market Risk Capital RequirementG and calculated in accordance with PIB section 5.4.
        Internal Capital Adequacy Assessment ProcessG (ICAAPG ) The internal capital adequacy assessment process prescribed in PIB chapter 10.
        Internal Risk Assessment ProcessG (IRAPG ) The internal risk assessment process prescribed in PIB section 10.3.
        Investment GradeG A credit rating which is a Credit Quality GradeG of 1, 2 or 3.
        Large ExposureG An ExposureG , whether in an Authorised Firm'sG Non-Trading BookG or Trading BookG , or both, to a CounterpartyG or group of Closely RelatedG CounterpartiesG or a group of CounterpartiesG ConnectedG to the Authorised FirmG which in aggregate equals or exceeds 10% of the Authorised Firm'sG Capital ResourcesG .
        LCR Requirement The LCR required to be maintained by an Authorised FirmG under PIB Rule 9.3.4 or, if applicable, under PIB Rule 9.3.6.
        Leverage Ratio The amount expressed as a percentage that is calculated in accordance with the Rules in section PIB 3.18.
        Leverage Ratio Exposure Measure The value of an Authorised FirmG 's exposures calculated in accordance with PIB Rule 3.18.3 to detemine its Leverage Ratio.
        Liquidity Coverage Ratio (LCR) The amount expressed as a percentage that is calculated in accordance with PIB Rule 9.3.5 and section PIB A9.2 of App 9.
        Liquidity RiskG The risk of loss to an Authorised FirmG as a result of inability to meet its obligations as they fall due.
        Market RiskG The risk of loss that arises from fluctuations in the values of, or income from, assets or in interest or exchange rates.
        Market Risk Capital RequirementG The requirement calculated in accordance with PIB Rule 5.3.1.
        Matched PrincipalG Has the meaning described in PIB Rule 1.3.3(2).
        Maturity LadderG A table that ordinally ranks the maturity time bands and assets and liabilities within them.
        Maturity MethodG This is an advanced approach that an Authorised FirmG may use to measure the risk of holding or taking positions in debt SecuritiesG and other interest rate-related instruments, calculated in accordance with PIB Rule A5.2.17.
        MDB Multilateral development bankG
        Modified DurationG The time period calculation for the purposes of the Duration MethodG in accordance with PIB Rule A5.2.21.
        MV Market value
        Net Stable Funding Ratio (NSFR) The amount, expressed as a percentage, calculated in accordance with PIB Rule 9.3.12, or, if applicable, PIB Rule 9.3.6.
        NettingG A process by which the claims and obligations between two CounterpartiesG are offset against each other to leave a single net sum.
        Non-Financial Private Sector Credit Exposure A Credit Risk Exposure to a party other than:
        (a) a sovereign;
        (b) a regional, provincial or municipal government;
        (c) a public sector entity;
        (d) a multilateral development bank; or
        (e) a bank.
        Non-Trading BookG Describes positions, ExposuresG and on-and off-balance sheet items, which are not in the Trading BookG .
        NP Nominal principal amount.
        NSFR Requirement The requirement for an Authorised FirmG to maintain a minimum NSFRG under PIB Rule 9.3.12(1) or, if applicable, PIB Rule 9.3.6.
        OSB< Off-balance sheet.
        OBS Exposure An ExposureG of an Authorised FirmG that is off-balance sheet..
        OBS-RSF Category A category, listed in Table 2 to PIB Rule A9.4.2, to which carrying value of an OBS ExposureG (or potential liquidity ExposureG ) is assigned..
        OBS-RSF Factor The factor, listed in Table 2 to PIB Rule A9.4.2, used to multiply the carrying value of an OBS ExposureG (or a potential liquidity ExposureG )..
        Operational RiskG The risk of loss resulting from inadequate or failed internal processes, people and systems or from external events, including legal risk.
        Operational RiskG Capital RequirementG The requirement calculated in accordance with PIB section 6.11.
        Option Risk Capital RequirementG A component of the Market Risk Capital RequirementG and calculated in accordance with PIB section 5.8.
        Original MaturityG
        (1) The time period between the date an offer is made and the date it expires or lapses.
        (2) In relation to DebenturesG , the interval between its issue date and the date on which it becomes due and payable.
        OriginatorG
        (a) an entity which, either itself or through related entities, directly or indirectly, creates the ExposureG being securitised; or
        (b) any entity which purchases or advises or causes an SPE to purchase the ExposuresG of a third party, which are then used in a securitisation (for avoidance of doubt, selling credit protection such that the entity or the SPE has a long position in the Credit RiskG of the obligor is equivalent to purchasing ExposuresG );
        Where an entity lends to an SPE with a view to enabling that SPE to make loans which are then used in a securitisation, the entity will generally be deemed to be acting as an OriginatorG .
        OTC Over the counter
        Potential Future Credit ExposureG (PFCE) An amount calculated by multiplying the nominal principal amount of an OTC derivative contract by a specified percentage dependent on the nature and residual maturity of the contract.
        PSE Public sector enterpriseG
        PSIAG Profit sharing investment accountG .
        Qualifying HoldingG Any holding in the capital of a non-financial UndertakingG of which the Authorised FirmG is a controller.
        Related PersonG Has the meaning given in PIB Rule 4.4.6.
        Relevant EntityG Means any of the following:
        (a) another Authorised FirmG ;
        (b) a Regulated Financial InstitutionG ;
        (c) any unregulated Financial InstitutionG ; or
        (d) any financial holding company.
        Required Stable Funding (RSF)G The amount, calculated in accordance with PIB Rule A9.4.2, representing the stable funding required by an Authorised FirmG .
        RSF CategoryG A category, listed in Table 1 to PIB Rule A9.4.2, to which the carrying value of an Authorised Firm's asset is assigned.
        RSF FactorG The applicable factor, listed in Table 1 to PIB Rule A9.4.2, used to multiply the carrying value of an asset of an Authorised FirmG .
        Re-securitisationG Has the meaning given in PIB section 4.14.
        Restricted PSIAG (PSIArG ) A PSIAG in respect of the investment account holder imposes certain restrictions as to where, how and for what purpose his funds are to be invested.
        Revolving SecuritisationG A Traditional or Synthetic SecuritisationG in which the specified items consist of revolving assets such as loan facilities or credit card balances which permit borrowers to vary the drawn amount within an agreed limit, or the scheme itself is revolving.
        RhoG The measure of an Option'sG sensitivity to a change in interest rates.
        Risk Capital RequirementG Has the meaning given in PIB Rule 3.8.1A.
        Risk Weighted Assets (RWA)G The risk weighted assets of an Authorised FirmG calculated in accordance with PIB Rule 3.8.2.
        SE ExposureG The ExposureG value or amount for a securitisation ExposureG .
        SecuritiesG UnderwritingG Capital RequirementG A component of the Market Risk Capital RequirementG defined in PIB section 5.10.
        ServicerG A PersonG that administers the securitised items.
        SFT SecuritiesG financing transactions, such as repo, reverse repo, security lending and borrowing, and margin lending transactions.
        Simplified ApproachG An alternative application of the provisions of PIB chapter 4 for an Authorised FirmG in CategoryG 2 and 3A, as described in sections PIB 4.7 and PIB A4.12.
        Special Purpose Entity (SPE) A corporation, trust, or other entity organised for a specific purpose, the activities of which are limited to those appropriate to accomplish the purpose of the SPE, and the structure of which is intended to isolate the SPE from the Credit RiskG of an OriginatorG or seller of ExposuresG . SPEs are commonly used as financing vehicles in which ExposuresG are sold to a trust or similar entity in exchange for cash or other assets funded by debt issued by the trust.
        Specific RiskG The risk that losses on an Authorised Firm'sG net long or short position in an individual equity or SecurityG may arise from a negative or positive price movement of that equity or SecurityG relative to the relevant market generally.
        SponsorG An Authorised FirmG that repackages third party assets directly into a securitisation scheme. Where an Authorised FirmG repackages non-Investment GradeG third party assets, it may fall within the definition of an OriginatorG unless it originates or repackages no more than 10% of the scheme's total assets.
        Standardised ApproachG The manner in which the Operational RiskG Capital RequirementG is calculated in accordance with sections PIB 6.11 and PIB A6.2.
        Supervisory Review and Evaluation ProcessG (SREPG ) The supervisory review and evaluation process prescribed in PIB chapter 10.
        Synthetic SecuritisationG Has the meaning given in PIB Rule 4.14.2(b).
        Systemically Important Bank (SIB) An Authorised FirmG designated by the DFSAG under PIB section 1.4 to be either or both of the following:
        (a) a D-SIB; or
        (b) a G-SIB.
        T Trade date, which is the date on which a transaction is entered into.
        T1 Tier 1
        T1 Capital Has the meaning given in PIB Rule 3.12.1.
        T2 Tier 2
        T2 Capital Has the meaning given in PIB Rule 3.15.1.
        ThetaG The ratio of the change in an OptionG price to the decrease in time to expiration. ThetaG can also be referred to as time decay.
        Total Net Cash Outflow Has the meaning given in PIB Rule A9.2.13
        Total Return SwapG A contract under which two parties exchange their positive or negative returns on a notional amount of a reference asset for a specified period of time.
        Trading BookG The positions and ExposuresG including, on and off-balance sheet items eligible for inclusion in the Trading BookG , as described in PIB section 2.2.
        Traditional SecuritisationG Has the meaning given in PIB Rule 4.14.2(a).
        Unrestricted PSIAG (PSIAuG ) A PSIAG in respect of which the investment account holder authorises the Authorised FirmG to invest the account holder's funds in a manner which the Authorised FirmG deems appropriate without laying down any restrictions as to where, how and for what purpose the funds should be invested.
        Unsettled TransactionG A transaction where delivery of an instrument is due to take place against the receipt of cash but remains outstanding.
        VegaG The measure of the sensitivity of the value of the OptionG to a change in the volatility of the underlying asset.
        Walkaway ClauseG A provision which permits a non-defaulting party to make payments, or no payments at all, to the estate of the defaulter, even if the defaulter is a net creditor.
        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]

    • PIB 1.3 Categories of Authorised Firms

      • PIB 1.3 Guidance

        1. Authorised FirmsG are divided into CategoriesG to provide a clear framework for determining which specific RulesG in PIBG apply to each Authorised FirmG . The RulesG in this section enable an Authorised FirmG to determine into which CategoryG it falls.
        2. The table in PIB A1.1 of PIB App1 sets out the categorisation process diagrammatically. In that table, an emboldened box indicates the Financial ServiceG that is determinative of the CategoryG into which an Authorised FirmG falls. An Authorised FirmG may, if authorised under its LicenceG to do so, conduct any number of Financial ServicesG specified under any lower CategoryG than the one that applies to the Authorised FirmG in accordance with this section (For this purpose CategoryG 5 is considered to be equivalent to CategoryG 1). For example, a CategoryG 1 firm could conduct any of the Financial ServicesG specified under CategoriesG 2, 3A, 3B, 3C or 4 (if authorised to do so). However, a CategoryG 4 firm may only conduct any of the Financial ServicesG listed under CategoryG 4 for which it is authorised.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • Category 1

        • PIB 1.3.1

          An Authorised FirmG is in CategoryG 1 if:

          (a) its LicenceG authorises it to carry on one or more of the Financial ServicesG of Accepting DepositsG or Managing a PSIAuG ; and
          (b) it does not meet the criteria of CategoryG 5.
          Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

          • PIB 1.3.1 Guidance

            A CategoryG 1 Authorised FirmG may be authorised to conduct other Financial ServicesG , but it is the authorisation for Accepting DepositsG or Managing a PSIAuG that is determinative of its belonging to CategoryG 1.

            Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • Category 2

        • PIB 1.3.2

          An Authorised FirmG is in CategoryG 2 if:

          (a) its LicenceG authorises it to carry on one or more of the Financial ServicesG of Providing CreditG or Dealing in Investments as PrincipalG ; and
          (b) its dealing activities are not limited in scope as provided in PIB Rule 1.3.3(1)(a)(i); and
          (c) it does not meet the criteria of CategoriesG 1 or 5.
          Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

          • PIB 1.3.2 Guidance

            1. A CategoryG 2 Authorised FirmG may be authorised to conduct other Financial ServicesG , but it is the authorisation for Dealing in Investments as PrincipalG (not only as a Matched PrincipalG ) or authorisation for Providing CreditG , and the absence of authorisation for the activities specified in PIB Rule 1.3.1, that are determinative of its belonging to CategoryG 2.
            2. Where the dealing activities of a firm are limited to acting only as Matched PrincipalG , the activities fall in the scope of CategoryG 3A in accordance with PIB Rule 1.3.3(1). A definition of "Matched PrincipalG " is in PIB Rule 1.3.3(2).
            Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • Category 3A

        • PIB 1.3.3

          (1) An Authorised FirmG is in CategoryG 3A if:
          (a) its LicenceG authorises it to carry on one or more of the Financial ServicesG of:
          (i) Dealing in Investments as PrincipalG (where it does so only as a Matched PrincipalG ); or
          (ii) Dealing in Investments as AgentG ; and
          (b) it does not meet the criteria of CategoriesG 1, 2 or 5.
          (2) For the purposes of PIBG , an Authorised FirmG Deals in InvestmentsG as a "Matched PrincipalG " if:
          (a) it enters into transactions as a principal only for the purpose of fulfilling its Clients'G orders;
          (b) it holds positions for its own account ("positions") only as a result of a failure to match Clients'G orders;
          (c) the total market value of the positions it holds is no more than 15% of the Firm's Tier 1 Capital ResourcesG ; and
          (d) the positions are incidental in nature and are strictly limited to the time reasonably required to carry out a transaction of that nature.
          Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

          • PIB 1.3.3 Guidance

            A CategoryG 3A Authorised FirmG may be authorised to conduct other Financial ServicesG , but it is the authorisation for Dealing in Investments as AgentG , or authorisation for Dealing in Investments as PrincipalG where it does so as a Matched PrincipalG , and the absence of authorisation for the activities specified in Rules PIB 1.3.1 and PIB 1.3.2 that are determinative of its belonging to CategoryG 3A.

            Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • Category 3B

        • PIB 1.3.4

          An Authorised FirmG is in CategoryG 3B if:

          (a) its LicenceG authorises it to carry on one or more of the Financial ServicesG of:
          (i) Providing CustodyG (where it does so for a FundG ); or
          (ii) Acting as the Trustee of a FundG ; and
          (b) it does not meet the criteria of CategoriesG 1, 2, 3A or 5.
          Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

          • PIB 1.3.4 Guidance

            A CategoryG 3B Authorised FirmG may be authorised to conduct other Financial ServicesG , but it is the authorisation for Providing CustodyG for a FundG or Acting as Trustee of a FundG , and the absence of authorisation for the activities specified in Rules PIB 1.3.1, PIB 1.3.2 and PIB 1.3.3 that are determinative of its belonging to CategoryG 3B.

            Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • Category 3C

        • PIB 1.3.5

          An Authorised FirmG is in CategoryG 3C if:

          (a) its LicenceG authorises it to carry on one or more of the Financial ServicesG of:
          (i) Managing AssetsG ;
          (ii) Managing a Collective Investment FundG ;
          (iii) Providing CustodyG (where it does so other than for a FundG );
          (iv) Managing a PSIAG (which is a PSIArG ); or
          (v) Providing Trust ServicesG (where it is acting as trustee in respect of at least one express trust); and
          (b) it does not meet the criteria of CategoriesG 1, 2, 3A, 3B or 5.
          Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

          • PIB 1.3.5 Guidance

            A CategoryG 3C Authorised FirmG may be authorised to conduct other Financial ServicesG , but it is the authorisation for Managing AssetsG , Managing a Collective Investment FundG , Providing CustodyG other than for a FundG , Managing a PSIAG which is a PSIArG , or Providing Trust ServicesG (where it is acting as a trustee in respect of at least one express trust), and the absence of authorisation for the activities specified in Rules PIB 1.3.1, PIB 1.3.2, PIB 1.3.3 and PIB 1.3.4 that are determinative of its belonging to CategoryG 3C.

            Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • Category 4

        • PIB 1.3.6

          An Authorised FirmG is in CategoryG 4 if:

          (a) its LicenceG authorises it to carry on one or more of the Financial ServicesG of Arranging Deals in InvestmentsG , Advising on Financial ProductsG , Arranging CustodyG , Insurance IntermediationG , Insurance ManagementG , Operating an Alternative Trading SystemG , Providing Fund AdministrationG , Providing Trust ServicesG (where it is not acting as trustee in respect of an express trust), Arranging Credit and Advising on CreditG or Operating a Crowdfunding PlatformG ; and
          (b) it does not meet the criteria of CategoriesG 1, 2, 3A, 3B, 3C or 5.
          Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
          [Amended] DFSA RM188/2016 (Made 7th December 2016). [VER26/02-17]
          [Amended] DSFA RM203/2017 (Made 14th June 2017). [VER28/08-17]

          • PIB 1.3.6 Guidance

            An Authorised FirmG in CategoryG 4 may not be authorised to conduct any other Financial ServiceG beyond those listed in PIB Rule 1.3.6(a); if it were so authorised it would belong to another CategoryG .

            Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • Category 5

        • PIB 1.3.7

          An Authorised FirmG is in CategoryG 5 if it:

          (a) is an Islamic Financial InstitutionG ; and
          (b) Manages a PSIAuG .
          Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

          • PIB 1.3.7 Guidance

            Authorised FirmsG in CategoriesG 1 to 4 may also carry out Islamic Financial BusinessG , but only those Authorised FirmsG in CategoriesG 1 or 5 may Manage a PSIAuG . They will not fall within CategoryG 5 unless the whole of the business is conducted in accordance with Shari'a and they Manage a PSIAuG .

            Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

    • PIB 1.4 Systemically Important Banks (SIBs)

      • PIB 1.4 Guidance

        1. This section provides for the DFSA to be able to designate an Authorised Firm as a Systemically Important Bank (SIB). A SIB is a bank whose impact, if it were to fail, could cause significant disruption to the financial system and the broader economy. To address the additional risks that SIBs pose, SIBs are subject to specific regulatory and supervisory measures, including higher capital charges in the form of an additional buffer (an HLA Capital Buffer) and more intensive supervision.
        2. The DFSA will base its approach to identifying SIBs, and the measures that it applies to SIBs, on the framework issued by the Basel Committee.
        3. In accordance with the Basel Committee framework, this section provides for the DFSA to designate two types of SIBs: global systemically important banks (G-SIBs) and domestic systemically important banks (D-SIBs). The main difference between the two types of SIBs, is that G-SIBs are capable of having a significant impact on the effective working and stability of the global financial system, while the potential impact of D-SIBs is on the local or regional financial system. The differences in the requirements that apply to each are explained later in this section.
        4. In appropriate cases, the DFSA may designate an Authorised Firm as both a G-SIB and a D-SIB if its failure could have a significant impact on both the global and regional financial systems. If the DFSA designates a firm as both a G-SIB and a D-SIB, the HLA Capital Buffer that applies will be whichever is the higher of the amount calculated for it as a G-SIB and the amount calculated for it as a D-SIB (see PIB Rule 3.9B.3). If a firm is a G-SIB, it does not automatically mean that it will be a D-SIB. For example, a firm may be systemically important globally, but it may not conduct significant business locally or regionally.
        Derived from DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]

      • Global Systemically Important Banks (G-SIBs)

        • PIB 1.4.1

          The DFSAG will designate an Authorised FirmG as a G-SIB if:

          (a) it is a Domestic FirmG in Category 1 or 5;
          (b) it is a member of a GroupG that is included on the list of global systemically important banks published by the Financial Stability BoardG ; and
          (c) the DFSAG is the overall consolidated supervisor of that GroupG .
          Derived from DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]

        • PIB 1.4.2

          The DFSAG may designate an Authorised FirmG as a G-SIB if:

          (a) the conditions in paragraphs (a) and (b) of Rule 1.4.1 are met in relation to the Authorised FirmG ; and
          (b) the DFSAG is not the overall consolidated supervisor of the GroupG but it considers that it is appropriate to treat the Authorised FirmG as a G-SIB.
          Derived from DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]

          • PIB 1.4.2 Guidance

            1. The Financial Stability BoardG (FSB), in consultation with the Basel CommitteeG , identifies and periodically publishes a list of global systemically important banks.
            2. If the DFSA is the consolidated supervisor of a GroupG included on the FSB list of global systemically important banks, it will designate an Authorised FirmG in the GroupG that is a bank as a G-SIB (see Rule 1.4.1).
            3. If an Authorised FirmG that is a bank is part of a GroupG included on the FSB list, but the DFSAG is not the consolidated supervisor of that Group, the DFSAG may designate that Authorised FirmG as a G-SIB if it considers it is appropriate to do so in all the circumstances (see Rule 1.4.2). If the DFSAG proposes to designate an Authorised FirmG as a G-SIB where it is not the consolidated supervisor of the relevant GroupG , it will normally consult first with the consolidated supervisor to ensure that the supervisors are taking a co-ordinated approach.
            4. A G-SIB, in addition to being subject to more intensive supervision, must maintain an extra capital buffer (the HLA Capital Buffer) under PIB section 3.9B. At the consolidated GroupG level, a G-SIB also has to publish quantitative indicators relating to its systemic importance (see PIB Rule 11.1.3 and App 11 Table 15) and carry out recovery and resolution planning.
            Derived from DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]

      • Domestic Systemically Important Banks (D-SIBs)

        • PIB 1.4.3

          The DFSAG may designate an Authorised FirmG as a D-SIB if:

          (a) it is a Domestic Firm or Branch in Category 1, 2 or 5; and
          (b) the DFSAG considers that the risks associated with the Authorised FirmG are such that, if it were to fail, it could have a significant impact on the effective working and stability of the banking or financial system locally or regionally.
          Derived from DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]

          • PIB 1.4.3 Guidance

            1. The DFSA will, in assessing if it should designate an Authorised FirmG as a D-SIB, take into account the factors suggested by the Basel CommitteeG in its framework for domestic systemically important banks. Those factors include the size, interconnectedness, substitutability and complexity of the firm. The DFSA will publish the general assessment methodology it applies in assessing if it should designate a firm as a D-SIB.
            2. The DFSAG may designate an Authorised FirmG as a D-SIB whether it is a Domestic FirmG or a BranchG . However, the measures that apply to a D-SIB that is a BranchG will be less extensive than those that apply to a D-SIB that is a Domestic FirmG . For example, while both are subject to more intensive supervision, a D-SIB that is a BranchG will not be subject to the HLA Capital Buffer RequirementG . This is because most capital requirements in chapter 3 do not apply to a BranchG as it is subject to capital requirements applied by its home state regulator.
            Derived from DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]

      • Procedures for designating SIBs

        • PIB 1.4.4

          (1) The DFSAG may amend or cancel a designation made under this section.
          (2) The DFSAG must publish a copy of any designation made under this section or any amendment or cancellation of that designation.
          (3) The procedures in Schedule 3 to the Regulatory LawG apply to a DFSA decision to designate an Authorised FirmG as a SIB or to amend the designation.
          (4) If the DFSAG decides to designate an Authorised FirmG as a SIB or to amend the designation, the Authorised FirmG may refer the matter to the FMT for review.
          (5) Paragraphs (3) and (4) do not apply to a DFSA decision to designate a G-SIB under PIB Rule 1.4.1 or to amend the designation.
          Derived from DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]

          • PIB 1.4.5 Guidance

            The Schedule 3 procedures and the right of review by the FMT do not apply to the designation of a G-SIB under Rule 1.4.1 (see Rule 1.4.4(5)). This is because the DFSAG , under Rule 1.4.1, will designate a bank as a G-SIB if it is included on the list of global systemically important banks published by the Financial Stability Board.

            Derived from DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]