IBANK 8.4.29 Treatment of maturing secured funding

(1) The runoff rates for secured funding that matures within the relevant 30-calendar-day period are as set out in table 8.4.29.
(2) Secured funding is an Islamic banking business firm's liabilities and general obligations collateralised by the grant of legal rights to specific assets owned by the firm.

This scenario assumes that the firm has lost its secured funding on short-term financing transactions. In this scenario, the firm could continue to transact securities financing transactions only if the transactions were backed by HQLA or were with the firm's domestic sovereign, public sector enterprise or central bank.

Table 8.4.29 Maturing secured funding — runoff rates

  Kind of funding Runoff rate (%)
1 Backed by level 1 HQLA 0
2 Backed by level 2A HQLA 15
3 Backed by assets that are not level 1 HQLA or level 2A HQLA, and the counterparty is any of the following:
•    a domestic sovereign;
•    an MDB
•    a domestic public sector enterprise that has a risk-weight of 20% or lower
4 Backed by Shari'a-compliant residential-mortgage-backed securities that are eligible as level 2B HQLA 25
5 Backed by other level 2B HQLA 50
6 All other maturing secured funding 100
(3) Collateral swaps, and any other transactions of a similar form, are to be treated as repo or reverse repo agreements. Collateral lent to the firm's customers to effect short positions is to be treated as secured funding.
(4) The firm must apply the factors to all outstanding secured funding transactions with maturities within 30 calendar days, including customer short positions that do not have a specified contractual maturity.
(5) The amount of outflow is the amount of funds raised through the transaction, and not the value of the underlying collateral.
Inserted by QFCRA RM/2018-2 (as from 1st May 2018).