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  • Contingency Funding Plan

    • Guidance

      A Contingency Funding Plan, or CFP, is a compilation of policies, procedures and action plans for responding to severe disruptions to an Authorised Firm's ability to meet its liabilities as they fall due or its ability to fund some or all of its activities quickly and at a reasonable cost.

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

    • PIB 9.2A.6 PIB 9.2A.6

      (1) An Authorised Firm must have a documented Contingency Funding Plan (CFP) that sets out clearly its strategies for addressing liquidity shortfalls in emergency situations.
      (2) An Authorised Firm must ensure that its CFP is in writing and is approved by its Governing Body.
      (3) The CFP must be commensurate with an Authorised Firm's complexity, risk profile and scope of operations and its role in the financial systems in which it operates.
      (4) The CFP must:
      (a) list the events or circumstances that will lead the Authorised Firm to put any part of the plan into action;
      (b) set out available potential contingency funding sources and the amount of funds an Authorised Firm estimates can be derived from these sources;
      (c) estimate the lead time needed to tap additional funds from each of the contingency sources;
      (d) set out the extent to which the plan relies upon:
      (i) asset sales, using assets as Collateral on secured funding (including repurchase agreements), securitising its assets or otherwise reducing its assets;
      (ii) modifying the structure of, or increasing, its liabilities; and
      (iii) the use of committed facilities; and
      (e) contain clear administrative policies and procedures that will enable the Authorised Firm to manage the implementation of the plan, including:
      (i) the roles and responsibilities of senior management, including who has the authority to invoke the CFP;
      (ii) the names, location and contact details of members of the team responsible for implementing the plan;
      (iii) the details of who is responsible for contact with the Authorised Firm's head office (if appropriate), analysts, investors, external auditors, media, significant customers, regulators and others; and
      (iv) the mechanisms that enable senior management and the Governing Body to receive relevant, accurate, comprehensive, timely and reliable management information.
      Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
      [Amended] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]

      • PIB 9.2A.6 Guidance

        1. The CFP should provide a framework with a high degree of flexibility so that an Authorised Firm can respond quickly in a variety of situations.
        2. The CFP's design, plans and procedures should be closely integrated with the Authorised Firm's ongoing analysis of Liquidity Risk and with the results of the scenarios and assumptions used in stress tests.
        3. The CFP should assist the Authorised Firm to manage a range of scenarios of severe liquidity stress that include both firm-specific and more generalised market-wide stress, as well as the potential interaction between them.
        4. The CFP should, for each of the tested scenarios, demonstrate that the Authorised Firm has sufficient liquid financial resources to meet its liabilities over a range of different time periods, including intraday.
        [Added] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]

    • PIB 9.2A.7

      An Authorised Firm must ensure that its CFP accounts for:

      (a) the impact of stressed market conditions on its ability to sell or securitise assets;
      (b) the link between asset liquidity and funding liquidity;
      (c) second round and reputational effects related to execution of contingency funding measures; and
      (d) the potential to transfer liquidity across Group entities, borders and lines of business, taking into account legal, regulatory, operational and time zone constraints.
      [Added] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]

    • PIB 9.2A.8 PIB 9.2A.8

      (1) An Authorised Firm must review and test its CFP regularly to ensure it is effective and operationally feasible.
      (2) For the purposes of (1), an Authorised Firm must review and update its CFP at least annually for approval by its Governing Body, or more frequently if required by business or market circumstances.
      [Added] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]

      • PIB 9.2A.8 Guidance

        1. Key aspects of CFP testing include ensuring that roles and responsibilities are appropriate and understood, confirming that contact information is up to date, proving the transferability of cash and collateral (especially across borders and entities) and ensuring that the necessary legal and operational documentation is in place to execute the plan at short notice.
        2. An Authorised Firm should test key assumptions regularly, such as its ability to sell or repo certain assets or periodically draw down credit lines.
        [Added] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]

    • PIB 9.2A.9 PIB 9.2A.9

      An Authorised Firm must ensure that its CFP is consistent with its business continuity and disaster recovery arrangements and can operate in situations where business continuity arrangements have been invoked.

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

      • PIB 9.2A.9 Guidance

        1. See GEN chapter 5 regarding requirements relating to an Authorised Firm's business continuity and disaster recovery arrangements.
        2. An Authorised Firm should ensure effective coordination between teams managing issues surrounding liquidity crises and business continuity. Liquidity crisis team members and alternates should have access to CFPs on-site and off-site.
        [Added] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]