(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 securities issued by sovereigns (including a central government or
Central Bank) of a jurisdiction that that has an ECA country risk score of 4 or better; and
(d) any debt securities issued by a PSE that is treated as a sovereign and is of a jurisdiction that has an ECA country risk score of 4 or better.
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]