(1) For an
Authorised Firm using the FCSA, eligible financial Collateral comprises:
(a) cash (as well as certificates of deposit or other similar instruments issued by the
Authorised Firm) on deposit with the Authorised Firm;
(c) any debt security:
(i) with an
Original Maturity of one year or less that has a short-term Credit Quality Grade of 3 or better as set out in PIB section 4.12; or
(d) any debt security issued by a bank that does not have an external credit assessment by a recognised
ECAI if it fulfils the following criteria:
(i) any debt security which is listed on a regulated exchange;
(ii) the debt security is classified as senior debt, not subordinated to any other debt obligations of its
(iii) all other rated debt securities issued by the same
Issuer which rank equally with the mentioned debt security have a long term or short term (as applicable) Credit Quality Grade by a recognised ECAI of "3" or better;
Authorised Firm is not aware of information to suggest that the issue would justify a Credit Quality Grade of below "3" as indicated in (iii) above; and
Authorised Firm can demonstrate to the DFSA that the market liquidity of the debt security is sufficient to enable the Authorised Firm to dispose the debt security at market price.
(e) any equity security (including convertible bonds) that is included in a main index; or
Unit in a Collective Investment Fund where:
(i) a price for the units is publicly quoted daily; and
(ii) at least 90% of the deposited property of the
Fund is invested in instruments listed in this Rule.
credit-linked notes issued by an Authorised Firm against Exposures in the Non-Trading Book which fulfil the criteria for eligible Credit Derivatives must be treated as cash collateralised transactions.
(3) Cash, mentioned in (1)(a), includes cash on deposit, certificates of deposit or other similar instruments issued by the
Authorised Firm that are held as Collateral at a third-party bank in a non-custodial arrangement and that are pledged or assigned to the Authorised Firm. This is subject to the pledge or assignment being unconditional and irrevocable. Under the FCSA, the risk weight to be applied to the Exposure covered by such Collateral must be the risk weight of the third-party bank.
Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]