IBANK 8.4.41 Treatment of other contingent funding obligations

(1) The runoff rates for other contingent funding obligations are as set out in table 8.4.41.
(2) Contingent funding obligations covers obligations arising from guarantees, letters of credit, unconditionally revocable financing and liquidity facilities, outstanding debt securities with remaining maturity of more than 30 calendar days, and trade finance (see subrule (3)). It also covers non-contractual obligations, including obligations arising from any of the following:
(a) potential liquidity draws from joint ventures or minority investments in entities;
(b) debt-buy-back requests (including related conduits);
(c) structured products;
(d) managed funds;
(e) the use of customers' collateral to cover other customers' short positions.

Table 8.4.41 Contingent funding obligations — runoff rates

Item Kind of obligation Runoff rate (%)
1 Unconditionally revocable uncommitted financing and liquidity facilities 5
2 Non-contractual obligations related to potential liquidity drawdowns from joint ventures or minority investments in entities 100
3 Trade-finance-related obligations (including letters of guarantee and letters of credit) (see subrules (3) and (4)) 5
4 Guarantees and letters of credit not related to trade finance obligations 5
5 Sukuk (more than 30 calendar days maturity) 5
6 Non-contractual obligations where customer short positions are covered by other customers' collateral 50
7 Any other non-contractual obligations not captured above (such as expected returns on profit-sharing accounts) 5
(3) Trade finance means trade-related obligations directly related to the movement of goods or the provision of services, such as the following:
(a) documentary trade letters of credit, documentary collection and clean collection, import bills, and export bills;
(b) guarantees directly related to trade finance obligations, such as shipping guarantees.
(4) However, lending commitments, such as direct import or export financing for non-financial corporate entities, are to be treated as committed financing facilities (see rule 8.4.39).
Inserted by QFCRA RM/2018-2 (as from 1st May 2018).