Entire Section

  • PIB 2 PIB 2 General Requirements

    • Introduction

      • PIB 2 Guidance

        This chapter details the threshold conditions for the mandatory maintenance of a Trading Book, periodic prudential reporting requirements to the DFSA, and guidance on prudent valuation practices. PIB Appendix 2 includes detailed Rules on the positions to be included in the Trading Book, the valuation of such positions, prudent valuation practices and associated issues related to the identification and treatment of Trading Book positions. PIB Appendix 2 also specifies the DFSA's expectations with regard to the need for a documented Trading Book policy and risk management systems and controls for the Trading Book. PIB Appendix 2 also presents in a tabular fashion, detailed specifications on periodic prudential reporting requirements for different categories of Authorised Firms.

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

    • PIB 2.1 PIB 2.1 Application

      • PIB 2.1.1

        This chapter applies to an Authorised Firm in any Category.

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

    • PIB 2.2 PIB 2.2 Trading Book

      • PIB 2.2.1

        An Authorised Firm must have a Trading Book if:

        (a) it has positions that must be included in a Trading Book in accordance with PIB section A2.1 of PIB App2;
        (b) those positions are held with trading intent in accordance with PIB Rule A2.1.5; and
        (c) the total value of the positions eligible for inclusion in the Trading Book pursuant to (a) and (b):
        (i) normally exceeds $15 million or 5% of its combined on and off-balance sheet positions; or
        (ii) has exceeded $20 million or 6% of its combined on and off-balance sheet positions at any time in the preceding twelve month period.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • PIB 2.2.2

        An Authorised Firm that must have a Trading Book in accordance with PIB Rule 2.2.1 must:

        (a) comply with the requirements of PIB section A2.1 of PIB App2; and
        (b) differentiate its business between Trading Book activity and Non-Trading Book activity on a consistent basis.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • PIB 2.2.3

        An Authorised Firm which has a Trading Book must have adequate systems and controls to:

        (a) monitor the size of its Trading Book; and
        (b) ensure that positions are included consistently in its Trading Book and Non-Trading Book so that:
        (i) the inclusion of hedging positions in the Trading Book or the Non-Trading Book at all times reflects the intent of the Authorised Firm in holding the position; and
        (ii) adequate records are made if positions are transferred between Trading and Non-Trading Books so that the transfers may be identified.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

    • PIB 2.3 PIB 2.3 Reporting to the DFSA

      • PIB 2.3.1

        (1) An Authorised Firm must comply with the accounting and prudential reporting requirements set out in this chapter and PRU which apply to it.
        (2) The DFSA may impose additional reporting requirements on an Authorised Firm.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • PIB 2.3.2 PIB 2.3.2

        An Authorised Firm must, subject to PIB Rule 2.3.3:

        (a) prepare its returns in accordance with the Rules in this chapter, the instructional guidelines in PRU, and the requirements of the DFSA's electronic prudential reporting system; and
        (b) submit the returns to the DFSA using the electronic prudential reporting system.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

        • PIB 2.3.2 Guidance

          The returns and instructional guidelines are provided in PRU and the DFSA's electronic prudential reporting system.

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

      • PIB 2.3.3

        The DFSA may by way of a written notice direct an Authorised Firm to submit its returns in a form, manner or frequency other than as prescribed in PIB Rule 2.3.2. An Authorised Firm must continue to submit its returns in accordance with this direction until the DFSA by way of written notice directs otherwise.

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

      • PIB 2.3.4

        (1) The submission of any return must be accompanied by a Form B100 (Declaration by Authorised Firms) signed by the Authorised Firm in the manner set out in (2) or (3) as applicable.
        (2) In relation to an annual return the form must be signed by two officers of the Authorised Firm each of whom is a Director, Partner or individual previously approved by the DFSA for that purpose.
        (3) In relation to a quarterly return the form must be signed by one officer of the Authorised Firm who is a Director, Partner or individual previously approved by the DFSA for that purpose.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • PIB 2.3.5

        An original signed hard copy of Form B100 (Declaration by Authorised Firms), together with a copy of the return submitted to the DFSA must be kept for at least 6 years for inspection by the DFSA.

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

      • PIB 2.3.6

        If the DFSA notifies an Authorised Firm, or the Authorised Firm itself forms the view, that a return that has been submitted to the DFSA appears to be inaccurate or incomplete, the Authorised Firm must consider the matter and within a reasonable time it must correct any inaccuracies and make good any omissions, and re-submit the relevant parts of the return.

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

      • PIB 2.3.7

        (1) An Authorised Firm must prepare and submit returns in accordance with Table 1 in section A2.4 of PIB App2, which forms part of these Rules.
        (2) All returns must be completed in thousands of dollars ($).
        (3) The requirement in (1) does not apply to an Authorised Firm if the only Financial Service it carries on is Managing a Venture Capital Fund.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
        [Amended] DFSA RM135/2014 (Made 21st August 2014). [VER22/06-14]
        [Added] DFSA RMI281/2020 (Made 28th October 2020). [VER37/11-20]

      • PIB 2.3.8

        (1) An Authorised Firm must submit to the DFSA any annual return required by Table 1 in PIB section A2.4 of PIB App2, within four months of the end of the Authorised Firm's financial year.
        (2) An Authorised Firm must submit to the DFSA any other return required by Table 1 in PIB section A2.4 of PIB App2, within one month after the end of the reporting period to which the return relates.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
        [Amended] DFSA RM135/2014 (Made 21st August 2014). [VER22/06-14]

      • PIB 2.3.9 PIB 2.3.9 [Deleted]

        [Deleted] DFSA RM209/2017 (Made 4th July 2017). [VER28/08-17]

        • PIB 2.3.9 Guidance [Deleted]

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

    • PIB 2.4 PIB 2.4 Prudent Valuation Practices

      • PIB 2.4 Guidance

        1. This section and related PIB section A2.5 in PIB App2 provide Authorised Firms with Guidance on prudent valuation for positions that are accounted for at fair value, whether they are in the Trading Book or in the Non-Trading Book (also known as the banking book).
        2. A framework for prudent valuation practices should at a minimum include adequate systems and controls and valuation methodologies. The DFSA's expectations in this regard are set out in PIB section A2.5 PIB App2.
        3. The Guidance is especially important for positions without actual market prices or observable inputs to valuation, as well as less liquid positions which raise supervisory concerns about prudent valuation. The Guidance is not intended to require Authorised Firms to change valuation procedures for financial reporting purposes.
        4. The DFSA will assess an Authorised Firm's valuation procedures for consistency with the Guidance. The DFSA may impose a valuation adjustment if there is a material degree of inconsistency between the Authorised Firm's valuation procedures and the Guidance.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]