IBANK 8.4.8 What assets are HQLA

(1) An asset is HQLA if it falls within any of rules 8.4.10 to 8.4.12, or is approved by the Regulatory Authority as HQLA under rule 8.4.13.

Guidance
Assets that fall within any of rules 8.4.10 to 8.4.12 are HQLA because such assets can be monetised easily and immediately with little or no loss of value.
(2) An Islamic banking business firm must not include an asset in its HQLA portfolio if the asset is encumbered.
Note For the meaning of encumbered, see rule 8.4.4 (2).
(3) The firm must not include an asset in the portfolio if the firm could not, for any operational, legal, regulatory or other reason, monetise it at any time and receive the proceeds within 30 calendar days.

Guidance
1 For example, the firm should not include an asset if:
•    the asset was hypothecated to the firm and the asset's beneficial owner has the right to withdraw it
•    the sale of the asset without replacement would remove a hedge so as to create an open risk position in excess of the firm's internal risk limit.
2 When considering whether to include a particular asset, a firm should take into account any possible delays in the settlement of a sale.
3 Subrule (3) would not prevent assets received as collateral for Shari'acompliant hedging transactions from being included in the portfolio provided that:
•    the assets are not segregated and are legally able to be re-hypothecated
•    the firm records an appropriate outflow for the associated risks.
Inserted by QFCRA RM/2018-2 (as from 1st May 2018).