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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Laws
Recognised Jurisdictions and Funds
Declaration Notices
Financial Markets Tribunal
Archive
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
Notices

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  • PIB 3 Part 2 — Basic Requirements

    • PIB 3.2 Requirements

      • Application

        • PIB 3.2.1

          In this section:

          (a) Rules PIB 3.2.2 to PIB 3.2.5 apply to an Authorised FirmG in any CategoryG ;
          (b) PIB Rule 3.2.6 applies only to an Authorised FirmG in CategoryG 3B, 3C or 4; and
          (c) PIB Rule 3.2.7 applies only to an Authorised FirmG in CategoryG 1, 2, 3A or 5.
          Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

        • Maintaining Capital Resources

          • PIB 3.2.2

            An Authorised FirmG that is a Domestic FirmG must:

            (a) have and maintain, at all times, Capital ResourcesG of the kinds and amounts specified in, and calculated in accordance with, the RulesG in PIBG ; and
            (b) ensure that it maintains capital and liquid assets in addition to the requirement in (a) which are adequate in relation to the nature, size and complexity of its business to ensure that there is no significant risk that liabilities cannot be met as they fall due.
            Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

            • PIB 3.2.2 Guidance

              1. For the purposes of PIB Rule 3.2.2, an Authorised Firm'sG Governing BodyG should assess whether the Capital ResourcesG which are required by the DFSAG as set out in PIBG are adequate in relation to the Authorised Firm'sG specific business. Additional resources should be maintained by the Authorised FirmG where its Governing BodyG has considered that the required Capital ResourcesG do not adequately reflect the nature and risks of the Authorised Firm'sG business.
              2. The liabilities referred to in PIB Rule 3.2.2(b) include an Authorised Firm'sG contingent and prospective liabilities, such as liabilities arising from a change in business strategy or claims made against the Authorised FirmG , but not liabilities that might arise from prospective transactions which the Authorised FirmG could avoid, for example by ceasing its operations. Liabilities from prospective transactions refers to the potential liabilities which can be avoided by either adequate risk management, risk transfer or avoiding the transaction completely. This refers to any prospective transaction, for example, lending money to a borrower or entering into a contract for the provision of services by a service provider.
              3. An Authorised FirmG subject to the requirements in PIB chapter 10 may be required to meet Individual Capital RequirementsG under those RulesG .
              Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

          • PIB 3.2.3

            An Authorised FirmG must have, at all times, Capital ResourcesG which exceed the amount of its Capital RequirementG .

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

        • Systems and Controls

          • Systems and Controls Guidance

            For the purposes of PIB section 3.2, an Authorised FirmG is required to have systems and controls in place to enable it to be certain that it has adequate Capital ResourcesG to comply with PIB Rule 3.2.3 at all times. An Authorised Firm'sG systems and controls should be such as to allow it to demonstrate its capital adequacy at any particular time if required to do so by the DFSAG . Where through the operation of those systems and controls an Authorised FirmG forms the view that it may not be able to satisfy the requirements of PIB Rule 3.2.3 in the future, that Authorised FirmG is required to immediately inform the DFSAG in accordance with PIB Rule 3.2.5.

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

          • PIB 3.2.4

            An Authorised FirmG that is a BranchG must:

            (a) ensure that it has and maintains, at all times, liquid assets and access to financial resources which are adequate in relation to the nature, size and complexity of its business to ensure that there is no significant risk that liabilities cannot be met as they fall due;
            (b) ensure that it complies with its home state Financial Services Regulator'sG prudential requirements;
            (c) submit to the DFSAG a copy of every capital adequacy summary report and leverage ratio report submitted to its home state Financial Services RegulatorG within ten business days of the due date for submission to that regulator; and
            (d) in the event of any anticipated or actual breach of any prudential requirements set by its home state Financial Services RegulatorG , notify the DFSAG forthwith with any relevant documents.
            Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
            [Amended] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]

          • PIB 3.2.5

            (1) An Authorised FirmG must have systems and controls to enable it to determine and monitor:
            (a) its Capital RequirementG ; and
            (b) whether the amount of its Capital ResourcesG is, and is likely to remain, greater than the amount of its Capital RequirementG .
            (2) Such systems and controls must include an analysis of:
            (a) realistic scenarios which are relevant to the circumstances of the Authorised FirmG ; and
            (b) the effects on the Capital RequirementG of the Authorised FirmG and on its Capital ResourcesG if those scenarios occurred.
            (3) An Authorised FirmG must notify the DFSAG immediately and confirm in writing any breach, or expected breach, of any of the provisions of this chapter by the Authorised FirmG .
            Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

            • PIB 3.2.5 Guidance

              1. PIB App3 provides GuidanceG on the nature and type of stress and scenario testing that Authorised FirmsG should be undertaking to support their view that they have adequate financial resources to meet their obligations.
              2. The requirements in this chapter apply to Authorised FirmsG on a solo basis. An Authorised FirmG may also be subject to Capital ResourcesG requirements at a GroupG level. GroupG requirements are addressed in PIB chapter 8.
              Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

        • Notifications to the DFSA

          • PIB 3.2.6

            (1) This RuleG applies to an Authorised FirmG in CategoryG 3B, 3C or 4.
            (2) An Authorised FirmG must notify the DFSAG immediately and confirm in writing if its Capital ResourcesG fall below 120% of its Capital RequirementG .
            Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

        • Requirements as to Composition of Capital

          • PIB 3.2.7

            (1) This RuleG applies to an Authorised FirmG in CategoryG 1, 2, 3A or 5.
            (2) Subject to PIB Rule 3.6.3 and (3), an Authorised FirmG must at all times maintain the following components of capital:
            (a) where the Risk Capital RequirementG forms part of the Capital Requirement of the firm under section PIB 3.3 or PIB 3.4:
            (i) CET1 Capital equating to at least 6.0% of the firm's Risk Weighted Assets; and
            (ii) T1 Capital equating to at least 8.0% of the firm's Risk Weighted Assets; or
            (b) where the Expenditure Based Capital MinimumG forms the Capital RequirementG of the firm under PIB section 3.4:
            (i) CET1 Capital equating to at least 60% of the firm's Expenditure Based Capital MinimumG ; and
            (ii) T1 Capital equating to at least 80% of the firm's Expenditure Based Capital MinimumG .
            (3) The CET1 Capital used to meet the requirement in (2)(a) must not also be used as a component of a Capital BufferG .
            Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
            [Amended] DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]

            • PIB 3.2.7 Guidance

              1. It follows from Rule 3.2.7(2)(a) and Rule 3.2.3 that an Authorised FirmG cannot use T2 Capital of more than 2% of its >Risk Weighted Assets to meet its Risk Capital Requirement.
              2. It follows from Rule 3.2.7(2)(b) and Rule 3.2.3 that an Authorised FirmG cannot use T2 Capital to meet more than 20% of its Expenditure Based Capital MinimumG .
              3. In accordance with Rules 3.9.5, PIB 3.9 A.3 and PIB 3.9B4 the CET1 Capital used for a Capital Buffer cannot constitute CET1 Capital for meeting the Risk Capital RequirementG .
              Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
              [Amended] DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]