Entire Section

  • Determining the location of credit exposures

    • PIB 3.9A.6 PIB 3.9A.6

      (1) This Rule specifies how an Authorised Firm must determine the jurisdiction in which it has a Non-Financial Private Sector Credit Exposure.
      (2) The jurisdiction in which an Authorised Firm has an exposure is to be determined by allocating the exposure to the jurisdiction where, to the best of the Authorised Firm's knowledge and information, the risk ultimately lies.
      (3) If it is not reasonably possible to determine the jurisdiction of an exposure under (2), then the jurisdiction in which the Authorised Firm has the exposure is the jurisdiction where the exposure is booked.
      Derived from DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]

      • PIB 3.9A.6 Guidance

        1. The location of an Authorised Firm's credit exposure is determined according to the concept of 'ultimate risk', i.e. the location where the risk ultimately lies. This is usually the location of the counterparties, irrespective of the Authorised Firm's own physical location or place of incorporation.
        2. The following examples illustrate how the concept of ultimate risk applies:
        a. if a firm has an exposure to a borrower in country A, and the risk mitigant (e.g. a guarantor) is in country B, then the ultimate risk is in country B;
        b. if, in the example in a, the exposure is only partly mitigated, then the ultimate risk would be split between the uncovered portion in country A and a covered portion in country B;
        c. if a firm has an exposure to a borrower that is a Branch in country A, and the head office of the Branch is in country B, then the ultimate risk is in country B; and
        d. if a firm has an exposure to a borrower in country A, and the exposure is to finance a project in country B, then the ultimate risk is in country B.
        Derived from DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]