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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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  • HQLA — general operational requirements

    • PIB A9.2.2

      To be eligible as HQLA, assets in the portfolio of HQLA must be appropriately diversified in terms of type of assets, type of issuer and specific counterparty or issuer.

      [Added] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]

    • PIB A9.2.3

      To be eligible as HQLA, assets must meet the following requirements:

      (a) the assets must be under the control of the specific function or functions charged with managing the liquidity of the Authorised FirmG who must have the continuous authority and legal and operational capability to liquidate any asset in the stock; and
      (b) a representative portion of the assets in the stock of HQLA must be liquidated periodically and at least annually by the Authorised FirmG to test its access to the market, the effectiveness of its processes for liquidation, the availability of the assets, and to minimise the risk of negative signalling during a period of actual stress.
      [Added] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]

    • PIB A9.2.4

      To be eligible as HQLA, an asset must also meet the following requirements:

      (a) the asset must be unencumbered and free of legal, regulatory, contractual or other restrictions that affect the ability of the Authorised FirmG to liquidate, sell, transfer, or assign the asset;
      (b) the asset must not be pledged, either explicitly or implicitly, to secure, collateralise or credit-enhance any transaction, nor be designated to cover operational costs (such as rents and salaries); and
      (c) an asset received in a reverse repo or securities financing transactions that is held at the Authorised FirmG , is eligible for inclusion in the stock of HQLA only if the asset has not been rehypothecated and is legally and contractually available for the Authorised Firm'sG use.
      [Added] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]

      • PIB A9.2.4 Guidance

        1. The requirements in Rules PIB A9.2.2 to PIB A9.2.4 are intended to ensure that the stock of HQLA is managed in such a way that the Authorised FirmG can, and is able to demonstrate that it can, immediately use the assets as a source of contingent funds that is available to convert into cash to fill funding gaps between cash inflows and outflows at any time during the 30-day stress period, with no restriction on the use of the liquidity generated.
        2. Under PIB Rule A9.2.3(a), the control of the HQLA may be evidenced either by:
        (a) maintaining assets in a separate pool managed by the identified liquidity management function (typically the treasurer) with the sole intent to use it as a source of contingent funds; or
        (b) demonstrating that the relevant function can liquidate the asset at any point in the 30-day stress period and that the proceeds are available to the function throughout the 30-day stress period without directly conflicting with a stated business or risk management strategy.
        3. Operational capability to liquidate assets referred to in PIB Rule A9.2.3(b), requires procedures and appropriate systems to be in place. This includes providing the liquidity management function with access to all necessary information to liquidate any asset at any time. Liquidation of the asset should be executable operationally within the standard settlement period for the asset class in the relevant jurisdiction.
        [Added] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]