Entire Section

  • Management of collateralised and encumbered assets

    • PIB 9.2.8

      (1) An Authorised Firm must prudently manage its collateral positions using a collateral management system.
      (2) The Authorised Firm's collateral management system must be able to:
      (a) distinguish between pledged and unencumbered assets, including during periods of liquidity stress;
      (b) take into account the legal entity in which liquid assets reside; and
      (c) identify, in a timely manner, the countries where assets are legally recorded and any restrictions imposed on their transfer or liquidation.
      (3) An Authorised Firm must manage its encumbered balance sheet assets within prudent limits to minimise the impact on its liquidity position and funding cost.
      (4) For the purposes of (3), the Authorised Firm's system supporting the management of encumbered assets must be able to provide information on:
      (a) the current and expected level and types of asset encumbrance and related transactions;
      (b) the nature of unencumbered assets including amount, location and credit quality;
      (c) the capacity for further asset encumbrance, including available unencumbered assets and the potential liquidity that can be generated; and
      (d) the expected amount, level and type of additional encumbrance that may result from stress scenarios.
      Derived from DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]