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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
Media Releases
Notices
Financial Markets Tribunal
Archive

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  • PIB 9.2.2

    (1) An Authorised Firm must ensure that its Governing Body is ultimately responsible for the Liquidity Risk assumed by the firm as well as the adequacy of systems, controls and processes used to manage that risk.
    (2) Without limiting the operation of (1), the responsibilities of an Authorised Firm's Governing Body in respect of Liquidity Risk include:
    (a) approving the Authorised Firm's Liquidity Risk policy;
    (b) establishing and maintaining a senior management structure with clearly defined responsibilities and roles for the management of Liquidity Risk and for ensuring compliance with the Authorised Firm's Liquidity Risk policy;
    (c) ensuring the senior management in (b) and other relevant personnel have the necessary experience to manage Liquidity Risk;
    (d) monitoring the Authorised Firm's overall Liquidity Risk profile on a regular basis by receiving adequate reporting and being aware of any material changes in the Authorised Firm's current or prospective Liquidity Risk profile;
    (e) ensuring that Liquidity Risk is adequately identified, assessed, mitigated, controlled and monitored in accordance with the Authorised Firm's Liquidity Risk policy;
    (f) ensuring that the Liquidity Risk policy are is documented; and
    (g) ensuring that the Liquidity Risk policy are is reviewed at least annually.
    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 9.2.2 Guidance

      1. Senior management and the Governing Body of an Authorised Firm are expected to demonstrate a thorough understanding of the links between funding liquidity risk and market liquidity risk, as well as how other risks, including credit, market, operational and reputation risks, affect the Authorised Firm's overall Liquidity Risk policy.
      2. Senior management should ensure that all business units with activities that have an impact on Liquidity Risk are aware of the Liquidity Risk policy and limits.
      3. Senior management should ensure that the Liquidity Risk policy outlines clearly the structure, responsibilities and controls for managing Liquidity Risk in and across different jurisdictions, legal entities and branches. They should also ensure that the structure, responsibilities and controls take into account legal, operational, regulatory, reputational and other constraints on liquidity transfer.
      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]

    • Requirements imposed on a Category 2 firm

      (3) An Authorised Firm in Category 2 must:
      (a) establish and maintain a senior management structure to manage Liquidity Risk;
      (b) identify, assess, mitigate, control and monitor Liquidity Risk; and
      (c) monitor the Authorised Firm's overall Liquidity Risk profile on a regular basis.
      [Added] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]

      • Guidance

        In respect of Rule 9.2.2(2)(b), senior management are expected to:

        a. oversee the development, establishment and maintenance of procedures and practices that translate the goals, objectives and risk tolerances approved by the Governing Body into operating standards that are consistent with the Governing Body's intent and which are understood by the relevant members of an Authorised Firm's staff;
        b. adhere to the lines of authority and responsibility that the Governing Body has established for managing Liquidity Risk;
        c. oversee the establishment and maintenance of management information and other systems that identify, assess, control and monitor the Authorised Firm's Liquidity Risk; and
        d. oversee the establishment of effective internal controls over the Liquidity Risk management process.
        [Added] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]