• IBANK Subdivision 8.4.C.1 IBANK Subdivision 8.4.C.1 Liquidity coverage ratio generally

    • IBANK 8.4.16 Liquidity coverage ratios required

      (1) Subject to rule 8.4.18, a liquidity risk group A Islamic banking business firm must maintain its LCR:
      (a) in the calendar year 2018 — at 90% or higher; and
      (b) in each subsequent calendar year — at 100% or higher.
      Note Rule 8.4.18 allows an Islamic banking business firm to monetise part of its HQLA portfolio during a period of liquidity stress.

      Guidance
      Rule 8.4.16 sets minimum levels and is not intended to limit the generality of the requirements in rule 8.4.6.
      (2) The requirement for the firm to maintain the LCR required by subrule (1) is called the firm's LCR requirement.

      Guidance
      An authorised firm must be continually aware of its LCR because of the requirements for the firm to maintain its LCR, and to report to the Regulatory Authority if the LCR falls below the firm's LCR requirement. How often the firm needs to calculate its LCR depends on the nature of the firm's business. Some relevant factors would be:
      •    how volatile the values of the firm's assets and exposures are
      •    how actively the firm trades.
      For the requirement to report if the firm's LCR falls below its LCR requirement, see rule 8.4.19.
      Inserted by QFCRA RM/2018-2 (as from 1st May 2018).

    • IBANK 8.4.17 Adjustment of firms' LCR by Regulatory Authority

      The Regulatory Authority may, by written notice to an Islamic banking business firm, do any 1 or more of the following:

      (a) change the firm's LCR requirement;
      (b) change the method for calculating the LCR requirement, or the assumptions or parameters for the purposes of that calculation;
      (c) impose additional requirements based on the Authority's assessment of the firm's exposure to liquidity risk.
      Inserted by QFCRA RM/2018-2 (as from 1st May 2018).

    • IBANK 8.4.18 Monetising HQLA during periods of liquidity stress

      During a period of liquidity stress, an Islamic banking business firm may monetise part of its HQLA portfolio, and may use the cash so generated to cover cash outflows. It may allow its LCR to fall below the level required by rule 8.4.16 to the extent necessary to deal with cash outflows during that period.

      Inserted by QFCRA RM/2018-2 (as from 1st May 2018).

    • IBANK 8.4.19 IBANK 8.4.19 Obligation to notify Regulatory Authority if LCR requirement not met

      (1) An Islamic banking business firm must notify the Regulatory Authority in writing immediately (but within 3 business days) if the firm ceases to meet its LCR requirement (or becomes aware of circumstances that may result in its ceasing to meet that requirement).
      (2) In the notification the firm must clearly explain:
      (a) why it ceased to meet, or thinks it may cease to meet, the requirement;
      (b) when it expects to again be able to meet the requirement; and
      (c) what it has done, and will do, to ensure that it meets the requirement in future, or continues to meet it, as the case requires.
      Inserted by QFCRA RM/2018-2 (as from 1st May 2018).

      • IBANK 8.4.19 Guidance

        An Islamic banking business firm that gives such a notification should discuss with the Regulatory Authority what further steps it should take to deal with the situation.

        Inserted by QFCRA RM/2018-2 (as from 1st May 2018).