BANK 3.4.10 Treatment of cash pooling arrangements

(1) For the purpose of calculating a banking business firm's on-balance-sheet exposures, if the firm operates a cash pooling arrangement that entails a transfer at least daily of the balances of each participating customer's account into a single balance, the customers' account balances are taken to be transformed into a single balance on the transfer if, after the transfer, the firm is not liable for the balances individually.

Guidance

Thus, the basis of the leverage ratio exposure is the single account balance and not those of the individual customer accounts.
(2) If the transfer does not occur daily, a transformation into a single account balance is taken to occur, and the single account balance may be taken as the basis of the exposure measure, if all of the following conditions are met:
(a) as well as providing for the individual customers' accounts, the arrangement provides for a single account into which of all the participating customers' account balances can be transferred;
(b) the firm:
(i) has a legally enforceable right to transfer each participating customer's account balance into a single account so that the bank is not liable for the balances individually, and
(ii) at any time, the firm has the discretion and is able to do so;
(c) the Regulatory Authority considers that the customers' account balances are transferred to a single account sufficiently often;
(d) either:
(i) there are no maturity mismatches among the customers' accounts; or
(ii) all of those accounts are either overnight or on demand;
(e) the firm pays interest and charges fees based on the combined balance of the customers' accounts that are covered by the arrangement.
(3) If the conditions in subrule (2) are not met, the firm's leverage ratio exposure measure must be based on the individual balances of the participating customer accounts.
Inserted by QFCRA RM/2019-6 (as from 1st January 2020).