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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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  • Responsibilities of Governing Body

    • PIB 7.4.3

      (1) An Authorised FirmG must ensure that its Governing BodyG is responsible for monitoring the nature and level of Non-Trading BookG interest rate risk assumed by the Authorised FirmG and the process used to manage that risk.
      (2) Without limiting the operation of (1), the responsibilities of an Authorised Firm'sG Governing BodyG in respect of the risk include:
      (a) approving the Authorised Firm'sG Non-Trading BookG interest rate risk policy, including its strategy and management framework;
      (b) establishing and maintaining a senior management structure for the management of the risk and for ensuring compliance with the Authorised Firm'sG risk strategy;
      (c) monitoring the Authorised Firm'sG overall Non-Trading BookG interest rate risk profile on a regular basis and being aware of any material changes in the Authorised Firm'sG current or prospective profile; and
      (d) ensuring that Non-Trading BookG interest rate risk is adequately identified, assessed, mitigated, controlled and monitored.
      Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • PIB 7.4.3 Guidance

        1. The Governing BodyG of the Authorised FirmG may delegate responsibility for establishing Non-Trading BookG interest rate risk policies and strategies to the Asset and Liability Committee (ALCO) or an equivalent committee, which is the designated senior management committee for managing balance sheet structure and interest rate risk associated with it.
        2. An Authorised FirmG involved in banking activities or complex principal dealing activities should have a designated committee for design and implementation of Non-Trading BookG interest rate risk management.
        3. An Authorised FirmG should establish and enforce operating limits and other practices that maintain ExposuresG within levels consistent with their internal policies and that accord with their approach to measuring the risk. In particular, Authorised FirmsG should set a limit on the extent to which floating rate ExposuresG are funded by fixed rate sources and vice versa to limit the risk. In floating rate lending, Authorised FirmsG should limit the extent to which they run any basis risk that may arise if lending and funding are not based on precisely the same market interest rate (e.g. LIBOR).
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]