VZ
Islamic Banking Business Prudential (Consequential) and Miscellaneous Amendments Rules 2015 QFCRA Rules 2015–3
The Board of the Qatar Financial Centre Regulatory Authority makes the
following rules, and gives the following guidance, under the Financial Services
Regulations.
Dated 13 December 2015.
Abdulla Saoud Al-Thani
Chairman
VZ Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015
contents 1
Islamic Banking Business Prudential (Consequential) and Miscellaneous Amendments Rules 2015 QFCRA Rules 2015–3
made under the
Financial Services Regulations
Contents
Page
Schedule 1 Consequential amendments arising from Islamic Banking Business Prudential Rules 2015 2
Part 1.1 Anti-Money Laundering and Combating Terrorist Financing Rules 2010 2
Part 1.2 Banking Business Prudential Rules 2014 2
Part 1.3 General Rules 2005 7
Part 1.4 Governance and Controlled Functions Rules 2012 9
Part 1.5 Investment Management and Advisory Rules 2014 9
Part 1.6 Islamic Finance Rules 2005 16
Contents
page
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Schedule 2 Amendments to Banking Business Prudential Rules 2014 to align with IBANK 17
Schedule 3 Miscellaneous and technical amendments 29
Part 3.1 Anti-Money Laundering and Combating Terrorist Financing (General Insurance) Rules 2012 29
Part 3.2 Banking Business Prudential Rules 2014 30
Part 3.3 Conduct of Business Rules 2007 46
Part 3.4 General Rules 2005 47
Part 3.5 Individuals (Assessment, Training and Competency) Rules 2014 53
Part 3.6 Insurance Business Rules 2006 54
Part 3.7 Interpretation and Application Rules 2005 62
Part 3.8 Islamic Finance Rules 2005 63
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1 Name of rules
These rules are the Islamic Banking Business Prudential
(Consequential) and Miscellaneous Amendments Rules 2015.
2 Commencement
These rules commence on 1 January 2016.
3 Rules amended
These rules amend the Rules in Schedules 1 to 3.
4 Explanatory notes
An explanatory note in these rules is not part of these rules.
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Schedule 1 Consequential amendments arising from Islamic Banking Business Prudential Rules 2015
(see r 3)
Part 1.1 Anti-Money Laundering and Combating Terrorist Financing Rules 2010
[1.1] Glossary, definition of QFC bank
substitute
QFC bank means an authorised firm that is:
(a) a deposit-taker, within the meaning of the Banking Business
Prudential Rules 2014; or
(b) an Islamic bank or Islamic investment dealer, within the
respective meanings of the Islamic Banking Business Prudential
Rules 2015.
Explanatory note
This amendment updates a definition.
Part 1.2 Banking Business Prudential Rules 2014
[1.2] Rule 1.1.4, guidance 1
omit
in relation to its commercial conduct—Conduct of Business Rules 2007
in relation to an Islamic financial manager—Islamic Finance Rules
2005.
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insert
in relation to its commercial conduct—Conduct of Business Rules 2007.
Explanatory note
This amendment and the next remove references to Islamic financial managers (which are now
dealt with in the Islamic Banking Business Prudential Rules 2015 (IBANK)).
[1.3] Rule 1.1.4, guidance 2
omit
(that is, as a deposit-taker, an investment dealer or an Islamic financial manager)
insert
(that is, as a deposit-taker or an investment dealer)
[1.4] Rule 1.3.1 (except guidance)
substitute
1.3.1 Introduction
(1) Banking business comprises the activities of deposit taking,
providing credit facilities and dealing in investments as principal. An
authorised firm that has an authorisation to conduct any of those
activities is a banking business firm.
(2) However, an authorised firm that is an Islamic bank or Islamic
investment dealer (within the respective meanings of the Islamic
Banking Business Prudential Rules 2015) is not a banking business
firm.
Note An authorised firm that is an Islamic bank or Islamic investment dealer
is an Islamic banking business firm—see the Islamic Banking Business
Prudential Rules 2015.
(3) A banking business firm may be a deposit-taker or an investment
dealer.
Explanatory note
This amendment substitutes a new rule that excludes the application of the rules to Islamic
banking business.
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[1.5] Rule 1.3.2 (1) (including the note)
substitute
(1) An authorised firm is a deposit-taker if it is authorised to conduct
either or both of the regulated activities of deposit taking and
providing credit facilities.
Explanatory note
This amendment and the next substitute new subrules that do not refer to Islamic financial
management.
[1.6] Rule 1.3.3 (1)
substitute
(1) An authorised firm is an investment dealer if:
(a) it is authorised to conduct the regulated activity of dealing in
investments as principal; and
(b) it is not a deposit-taker.
[1.7] Rule 1.3.4 (including examples)
omit
Explanatory note
This amendment omits a rule applicable only to Islamic financial managers.
[1.8] Rule 2.1.6 (1)
omit
AAOIFI,
Explanatory note
This amendment removes a reference to AAOIFI, which does not issue accounting standards for
conventional banks.
[1.9] Rule 3.2.4 (a)
substitute
(a) for a deposit-taker—QR 35 million; or
Explanatory note
This amendment substitutes a new paragraph that does not refer to Islamic financial management.
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[1.10] Rule 3.2.16 (1) (b)
omit
deposit-taker, investment dealer or Islamic financial manager
insert
deposit-taker or investment dealer
Explanatory note
This amendment removes a reference to Islamic financial managers.
[1.11] Rule 4.5.7 (2)
omit
every 6 months.
insert
a month.
Explanatory note
This amendment increases the frequency of marking collateral to market.
[1.12] Table 4.8.7, items 3 and 5
omit each occurrence of
or Islamic financial manager
Explanatory note
This amendment removes 4 references to Islamic financial managers.
[1.13] Rule 5.3.4 (including guidance)
omit
Explanatory note
This amendment removes a rule applicable only to Islamic financial managers.
[1.14] Rule 6.6.1, note
omit
Explanatory note
This amendment removes a note applicable only to Islamic financial managers.
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[1.15] Rule 7.1.7 (4)
omit
Explanatory note
This amendment removes a subrule applicable only to Islamic financial managers.
[1.16] Rule 7.1.7 (5)
omit
deposit-taker, investment dealer or Islamic financial manager,
insert
deposit-taker or investment dealer,
Explanatory note
This amendment removes a reference to Islamic financial managers.
[1.17] Rule 8.1.1, note
omit
Explanatory note
This amendment removes a note applicable only to Islamic financial managers.
[1.18] Chapter 11
omit
Explanatory note
This amendment removes a Chapter applicable only to Islamic financial managers.
[1.19] Rule 13.1.2 (2), (3) and (4)
omit
Explanatory note
This amendment removes transitional provisions that are no longer required or apply only to
Islamic financial managers.
[1.20] Glossary, definition of customer, paragraph (a)
omit
or Islamic financial manager
Explanatory note
This amendment removes a reference to Islamic financial managers.
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[1.21] Glossary
omit the following definitions
AAOIFI
IAH
Islamic financial institution
Islamic financial management
Islamic financial manager
profit-sharing investment account (or PSIA)
PSIA
restricted PSIA
unrestricted PSIA
Explanatory note
This amendment removes definitions of terms that are no longer used in BANK.
Part 1.3 General Rules 2005
[1.22] Rule 9.3.2
after
an Islamic financial institution
insert
(other than an Islamic bank or Islamic investment dealer, within the
respective meanings of IBANK)
Explanatory note
This amendment and the next remove the Rules’ application, to certain Islamic financial
institutions, of requirements that are now dealt with in IBANK.
[1.23] Rule 9.5.1 (1) (A) (ii)
substitute
(ii) for Islamic financial business (other than Islamic banking
business or Islamic investment business, within the
respective meanings of IBANK)—AAOIFI;
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[1.24] After rule 9.5.1 (1) (C) (via)
insert
(vib) for an authorised firm that is subject to the risk-based
capital requirement in IBANK—in the auditor’s opinion,
the firm has calculated its risk-based capital requirement
in accordance with IBANK;
Explanatory note
This amendment inserts a requirement for a particular auditor’s certification for authorised firms
to which IBANK applies.
[1.25] Schedule 2, after item 9
insert
10 IBANK
10.1 Prudential returns
r 2.1.4 (Preparing returns)
10.2 Shari’a compliance
r 12.1.13 (Firm must give copy of report)
Explanatory note
This amendment inserts references to reporting requirements in IBANK.
[1.26] Schedule 3, after item 13
insert
14 IBANK
14.1 Credit risk mitigation
r 4.6.17 (Capital relief from hedging instruments)
r 4.6.25 (Monitoring and reporting of netting agreements)
14.2 Market risk
r 6.1.7 (Policies—market risk environment)
14.3 Liquidity risk
r 8.1.15 (Management of encumbered assets)
14.4 Compliance with Shari’a
r 12.1.5 (Adequate records to be kept)
r 12.1.12 (Internal Shari’a reviews)
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Explanatory note
This amendment inserts references to record-keeping requirements in IBANK.
[1.27] Glossary
insert
IBANK means the Islamic Banking Business Prudential Rules 2015.
Explanatory note
This amendment inserts a new definition.
Part 1.4 Governance and Controlled Functions Rules 2012
[1.28] Glossary, definition of QFC bank
substitute
QFC bank means an authorised firm that is:
(a) a deposit-taker, within the meaning of BANK; or
(b) an Islamic bank or Islamic investment dealer, within the
respective meanings of the Islamic Banking Business Prudential
Rules 2015.
Explanatory note
This amendment updates a definition.
Part 1.5 Investment Management and Advisory Rules 2014
[1.29] Rule 1.1.4
substitute
1.1.3A Declaration of activities as regulated activities
(1) For FSR, article 23 (2), each of the following activities is a regulated
activity:
(a) dealing (as agent) in Islamic investments;
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Note Buying, selling, subscribing for or underwriting any Islamic
investment as principal is covered by IBANK.
(b) arranging deals in Islamic investments;
(c) arranging Shari’a-compliant financing facilities;
(d) providing custody services in relation to Islamic investments;
(e) arranging the provision of custody services in relation to Islamic
investments;
(f) managing Islamic investments;
(g) advising on Islamic investments.
(2) Islamic investments means investments through any 1 or more of the
following kinds of Islamic financial contracts mentioned in IBANK,
rule 1.1.6 (b):
(a) musharakah and its variations;
(b) mudarabah and its variations;
(c) any other Islamic financial contract that is recognised by the
firm’s Shari’a supervisory board.
1.1.4 Application of these rules—general
Subject to rule 1.1.5, these rules apply to an entity that has, or is
applying for, an authorisation to conduct any of the following
activities:
(a) dealing in investments (if limited to dealing as agent);
Note Dealing in investments as principal is covered by BANK or
IBANK, as applicable. Dealing in investments includes buying,
selling, subscribing for or underwriting investment.
(b) managing investments;
(c) providing custody services;
(d) operating a collective investment scheme;
(e) providing custody services in relation to a collective investment
scheme;
(f) providing scheme administration (that is, providing scheme
administration in relation to a collective investment scheme);
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(g) arranging deals in investments;
(h) arranging the provision of custody services;
(i) arranging financing facilities;
(j) advising on investments.
Note Each reference to investments in rule 1.1.4 includes Islamic
investments—see the Glossary.
Guidance
1 The following Rules also apply to a firm to which these Rules apply:
if it is a banking business firm, within the meaning given by BANK—
those Rules
if it is an Islamic banking business firm, within the meaning given by
IBANK—those Rules
if it is an Islamic financial institution (but not an Islamic banking
business firm)—ISFI
in relation to its commercial conduct—COND
if it operates a collective investment scheme—COLL
if it operates a private placement scheme—PRIV.
Rules that are of general application (CTRL, INDI, GENE, AML/CFTR and
INAP) also apply.
2 It is possible for a firm both to be authorised as a banking business firm under
BANK (that is, as a deposit-taker or investment dealer) and to hold an
authorisation referred to in rule 1.1.4. Both these rules and BANK would apply
to such a firm to some degree. Similarly, it is possible for a firm to be
authorised as an Islamic banking business firm under IBANK and to hold an
authorisation referred to in rule 1.1.4. (The firm’s authorisation would include
a condition that the whole of its business must be conducted in accordance
with Shari’a.) Both these rules and IBANK would apply to such a firm to some
degree. (It is not possible for a firm to be authorised under both BANK and
IBANK because Islamic windows are not permitted.)
3 For example, a banking business firm that also holds an authorisation referred
to in rule 1.1.4 will need to comply with these rules, except as follows:
Part 3.3 (Minimum capital and liquid assets requirements) does not
apply because compliance with the capital adequacy and liquidity
requirements in BANK or IBANK (as applicable) is taken to be
compliance with Part 3.3.
Part 4.3 (Professional indemnity insurance) would not apply because the
Regulatory Authority considers it unnecessary for a firm that is also
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authorised as a banking business firm or an Islamic banking business
firm.
Part 4.1 (Introduction—Chapter 4), Part 4.2 (Risk management) and
Schedule 1 (Guidance about risk management) would not apply if the
firm can demonstrate to the Regulatory Authority’s satisfaction that,
having complied with BANK or IBANK (as applicable), the firm has in
effect addressed all of the risks and other matters that Part 4.2 would
otherwise require it to address.
Explanatory note
This amendment inserts new rules declaring activities in relation to Islamic investments as
regulated activities and providing for the Rules to apply to authorised firms that operate in
compliance with Shari’a.
[1.30] Rule 3.3.1 (2)
substitute
(2) If an INMA firm is also authorised under BANK or IBANK, and the
firm complies with the capital requirements under whichever of those
Rules applies, the firm is taken to comply with this Part.
Explanatory note
This amendment substitutes a subrule including a reference to IBANK.
[1.31] Table 3.3.3
omit
Arranging credit facilities
insert
Arranging financing facilities
Explanatory note
This amendment updates a defined term.
[1.32] Rule 5.1.2 (2), note
omit
arranging credit facilities
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insert
arranging financing facilities
Explanatory note
This amendment updates a defined term.
[1.33] Glossary, definition of advising on investments
substitute
advising on investments includes:
(a) the regulated activity described in FSR, Schedule 3, Part 2,
paragraph 11; and
(b) advising on Islamic investments.
Explanatory note
This amendment and the next 5 substitute new definitions to take account of the Rules’ coverage
of activities in relation to Islamic investments.
[1.34] Glossary, definitions of arranging credit facilities and arranging deals in investments
substitute
arranging deals in investments includes:
(a) the regulated activity described in FSR, Schedule 3, Part 2,
paragraph 5; and
(b) arranging deals in Islamic investments.
arranging financing facilities includes:
(a) arranging credit facilities—that is, the regulated activity
described in FSR, Schedule 3, Part 2, paragraph 7; and
(b) arranging Shari’a-compliant financing facilities.
[1.35] Glossary, definition of arranging the provision of custody services
substitute
arranging the provision of custody services includes:
(a) the regulated activity described in FSR, Schedule 3, Part 2,
paragraph 9; and
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(b) arranging the provision of custody services in relation to Islamic
investments.
[1.36] Glossary, definition of dealing in investments
substitute
dealing in investments includes:
(a) the regulated activity described in FSR, Schedule 3, Part 2,
paragraph 4; and
(b) dealing (as agent) in Islamic investments.
[1.37] Glossary, definition of managing investments
substitute
managing investments includes:
(a) the regulated activity described in FSR, Schedule 3, Part 2,
paragraph 10; and
(b) managing Islamic investments.
[1.38] Glossary, definition of providing custody services
substitute
providing custody services includes:
(a) the regulated activity described in FSR, Schedule 3, Part 2,
paragraph 8; and
(b) providing custody services in relation to Islamic investments.
[1.39] Glossary, definition of QFC bank
substitute
QFC bank means an authorised firm that is:
(a) a deposit-taker, within the meaning of BANK; or
(b) an Islamic bank or Islamic investment dealer, within the
respective meanings of IBANK.
Explanatory note
This amendment updates a definition.
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[1.40] Glossary, definition of relevant investments
substitute
relevant investments means:
(a) investments of the following kinds (in each case, within the
meaning given in FSR, Schedule 3, Part 3), and rights in such
investments:
(i) shares;
(ii) debt instruments;
(iii) warrants;
(iv) securities receipts;
(v) units in collective investment schemes;
(vi) options;
(vii) futures;
(viii) contracts for differences; and
(b) Islamic investments and rights in such investments.
Explanatory note
This amendment substitutes a new definition to take account of the Rules’ coverage of activities
in relation to Islamic investments.
[1.41] Glossary
insert
IBANK means the Islamic Banking Business Prudential Rules 2015.
investments includes Islamic investments.
Islamic investments has the meaning given by rule 1.1.3A (2).
Explanatory note
This amendment inserts 3 new definitions to take account of the Rules’ coverage of activities in
relation to Islamic investments.
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Part 1.6 Islamic Finance Rules 2005
[1.42] After rule 1.1.2
insert
1.1.3 Application
These rules do not apply to an Islamic bank or an Islamic investment
dealer (within the respective meanings of the Islamic Banking
Business Prudential Rules 2015).
Explanatory note
This amendment removes the application of the rules, to certain Islamic financial institutions, of
requirements that are now dealt with in IBANK.
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Schedule 2 Amendments to Banking Business Prudential Rules 2014 to align with IBANK
(see r 3)
Explanatory note for Schedule 2
The amendments in this Schedule bring requirements in BANK into line with equivalent
requirements in IBANK.
[2.1] Rule 3.2.11 (12)
after
trigger point.
insert
The conversion must be made in accordance with rule 3.2.14.
Explanatory note
This amendment gives detail about the conversion of certain debt instruments into equity.
[2.2] Rule 3.2.34 (2)
omit
if there isn’t enough capital at that category, from the next category
up.
insert
if there is not enough capital at that category, from the next higher
category.
Explanatory note
This amendment substitutes more formal language in accordance with normal drafting practice.
[2.3] Rule 3.3.3 (2), examples 1 and 2
substitute
1 If a firm’s CET 1 capital ratio is 4.5% or more but less than 5.125%, the firm
needs to conserve 100% of its earnings.
2 If a firm’s CET 1 capital ratio is 5.125% or more but less than 5.75%, the firm
needs to conserve 80% of its earnings and must not distribute more than 20%
of those earnings by way of dividends, share buybacks and discretionary bonus
payments.
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Explanatory note
This amendment clarifies the examples.
[2.4] After rule 3.3.3 (4)
insert
(5) If the firm is a member of a financial group, the capital conservation
buffer applies at group level.
Explanatory note
This amendment applies certain capital requirements to a firm’s financial group as well as to the
firm itself.
[2.5] Rule 3.3.5 (4), example
omit
Explanatory note
This amendment removes a superfluous example.
[2.6] Rule 4.3.1, guidance 2
omit
, or those solicited from a nominated ECRA
Explanatory note
This amendment and the next 4 clarify the requirements in relation to the use of credit ratings.
[2.7] Rule 4.3.2 (c)
substitute
(c) to rate and risk-weight a counterparty;
[2.8] Rule 4.3.7 (1)
substitute
(1) A banking business firm must use only a solicited credit risk rating
determined by an ECRA in determining the risk-weights for the
firm’s exposures.
[2.9] Rule 4.3.7 (3)
omit
its nominated ECRAs
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insert
an ECRA
[2.10] Rule 4.3.7 (3), example
omit
a nominated ECRA
insert
an ECRA
[2.11] After rule 4.3.7
insert
4.3.7A Multiple assessments
(1) If there is only 1 assessment by an ECRA for a particular claim or
asset, that assessment must be used to determine the risk-weight of
the claim or asset.
(2) If there are 2 assessments by ECRAs and the assessments map into
different risk weights, the higher risk-weight must be applied.
(3) If there are 3 or more assessments with different risk weights, the
assessments corresponding to the 2 lowest risk-weights should be
referred to, and the higher of those 2 risk-weights must be applied.
Explanatory note
This amendment clarifies how ECRA assessments are to be used to determine risk-weights.
[2.12] Rule 4.4.1 (2)
omit
a nominated ECRA
insert
an ECRA
Explanatory note
This amendment and the next 2 clarify the requirements in relation to the use of credit ratings.
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[2.13] Rule 4.4.4 (3)
omit
its nominated ECRA
insert
an ECRA
[2.14] Rule 4.4.7 (3)
substitute
(3) If column 3 of table 4.4.7A states that the risk weight is “based on
ECRA rating”, the applicable risk-weight for the claim or asset is that
in table 4.4.7B. If a claim or asset’s risk-weight is to be based on the
ECRA rating and there is no such rating from an ECRA, the firm must
apply the risk-weight in the last column of table 4.4.7B.
[2.15] Table 4.4.7A, items 11 and 12
substitute
11 Unsettled and failed transactions—
delivery-versus-payment transactions:
(a) 5 to 15 days 100
(b) 16 to 30 days 625
(c) 31 to 45 days 937.5
(d) 46 or more days 1250
12 Unsettled and failed transactions—
non-delivery-versus-payment transactions
100
Explanatory note
This amendment inserts some words descriptive of the relevant transactions.
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[2.16] Table 4.4.7A, item 15 (column 3)
omit
400
insert
150
Explanatory note
This amendment substitutes a new risk-weight for certain assets.
[2.17] Before table 4.4.7B
insert
Note In table 4.4.7B, the ratings are shown according to Standard & Poor’s
conventions. If a claim or asset is not rated by Standard & Poor’s, its
rating must be mapped to the equivalent Standard & Poor’s rating.
Explanatory note
This amendment inserts a note clarifying the intended operation of the table.
[2.18] Table 4.4.7B, heading
substitute
Table 4.4.7B Risk-weights based on ratings determined by ECRAs
Explanatory note
This amendment clarifies the requirements in relation to the use of credit ratings.
[2.19] Rule 4.5.4 (3) (b)
substitute
(b) the ECRA that determined the rating had taken the technique
into consideration in doing so.
Explanatory note
This amendment and the next 2 clarify the requirements in relation to the use of credit ratings.
[2.20] Rule 4.5.7 (1) (c)
omit
the firm’s nominated ECRA,
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insert
an ECRA,
[2.21] Rule 4.5.7 (1) (d)
omit
the firm’s nominated ECRA
insert
an ECRA
[2.22] Rule 5.3.1 (2), definition of gross exposure, paragraph (b)
substitute
(b) debt securities held by the firm;
Explanatory note
This amendment corrects a drafting error.
[2.23] Before rule 6.1.1
insert
Division 6.1.A Governing body, trading book and policies
Explanatory note
This amendment inserts a heading reflecting the general nature of rules 6.1.1 to 6.1.10.
[2.24] Rule 6.1.1 (2), note
omit
Explanatory note
This amendment omits a note now considered unnecessary.
[2.25] Rule 6.1.1 (3), paragraphs (a) to (c)
substitute
(a) foreign exchange risk in the banking book and trading book;
(b) options risk in the banking book and trading book;
(c) commodities risk in the banking book and trading book;
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Explanatory note
This amendment clarifies what is included in the calculation of a firm’s market risk capital
requirement.
[2.26] After rule 6.1.7 (1)
insert
(1A) In particular, the firm must have policies on:
(a) what to include, or not to include, in the trading book;
(b) managing and reporting trading positions;
(c) valuing positions, including:
(i) clearly defined responsibilities of staff involved in the
valuation;
(ii) sources of market information, and review of their
reliability;
(iii) frequency of independent valuations;
(iv) timing of closing prices;
(v) procedures for adjusting valuations between periods;
(vi) ad-hoc verification procedures; and
(vii) reporting lines for the valuation function that are
independent of that function that gave rise to the position.
Explanatory note
This amendment provides detail about the operation of the rule.
[2.27] Rule 6.1.11
substitute
Division 6.1.B Measurement of risk and valuation of positions
6.1.11 Valuing positions—mark-to-market
(1) A banking business firm must use the mark-to-market method to
value its positions and exposures if there is a market to mark the
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positions and exposures to. Mark-to-market means a valuation that is
based on current market value.
Guidance
1 The Regulatory Authority would expect a banking business firm to mark-to-
market listed securities since there is a market with observable and reliable
prices for such securities.
2 The firm should mark-to-market as much as possible. It should use the prudent
side of bid or offer unless the firm is a significant market maker that can close
at mid-market.
3 When estimating fair value, the firm should maximise the use of relevant
observable inputs and avoid the use of unobservable inputs.
(2) A position that is marked-to-market must be revalued daily, based on
independently sourced current market prices.
6.1.12 Valuing positions—mark-to-model
(1) If it is not possible to mark-to-market (for example, in the case of
unlisted securities or where the market is inactive), a banking
business firm may use the mark-to-model method to value its
positions and exposures. Mark-to-model means a valuation that has
to be benchmarked, extrapolated or otherwise calculated from a
market input.
(2) The firm must be able to demonstrate that its marking-to-model is
prudent.
Guidance
A banking business firm should be extra conservative when marking-to-model. The
Regulatory Authority will take into account the following in deciding if the firm’s
model is prudent:
whether senior management is aware of the positions and exposures that are
marked to model and whether it understands the uncertainty this might create
in reporting the risk or performance of the business
the extent to which market inputs are sourced from market prices
the appropriateness of the assumptions used by the firm
the availability of generally accepted valuation methods for particular products
who developed the model
whether the firm holds a secure copy of the model
the existence of formal control procedures for changing the model
VZ Islamic Banking Business Prudential (Consequential) and
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how often the model is used to check valuations
how aware is the firm’s risk management function of the weaknesses of the
model and how those weaknesses are reflected in the valuation output
the results of comparisons between actual close out values and model outputs
the firm’s procedures for reviewing the model.
6.1.13 Independent price verification
A banking business firm must independently verify market prices and
model inputs, to check that those prices and inputs are accurate. The
verification must be done at least once a month.
Guidance
1 Independent price verification is different from daily mark-to-market. The
object of the verification is to regularly check the accuracy of market prices or
model inputs and, thereby, eliminate inaccurate daily marks. The verification
should be carried out by a unit independent of whoever marked the positions
or exposures.
2 The independent marking in the verification process should reveal any error
or bias in pricing. It entails a higher standard of accuracy in that the market
prices or model inputs are used to determine profit and loss figures, whereas
daily marks are used primarily for management reporting in between reporting
dates.
6.1.14 Valuation adjustments
(1) A banking business firm must consider making adjustments for
positions that cannot be prudently valued (such as those that have
become concentrated, less liquid or stale). For example, valuation
adjustment would be appropriate if pricing sources are more
subjective (such as when there is only one available broker quote).
(2) The firm must establish and maintain procedures for considering
valuation adjustments. This rule applies whether:
(a) the firm uses the mark-to-market or mark-to-model method; and
(b) whether the valuation is done by the firm itself or a third party.
(3) The firm must consider the following valuation adjustments:
(a) unearned profit;
(b) close-out costs;
page 26 Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015 VZ
(c) operational risks;
(d) early termination;
(e) investing and funding costs;
(f) future administrative costs;
(g) model risk, if relevant;
(h) any other adjustment that the firm considers appropriate.
Explanatory note
This amendment provides detail on how a firm’s positions should be valued.
[2.28] Rule 6.2.2 (1) (d)
substitute
(d) any other items representing an exposure to risk in foreign
currencies (for example, a specific provision held in the
currency in question where the underlying asset is held in a
different currency).
Explanatory note
This amendment clarifies the intended meaning of the paragraph.
[2.29] Part 6.3, heading
substitute
Part 6.3 Options risk Explanatory note
This amendment ensures that the heading accurately reflects the content of the Part.
[2.30] Rule 6.3.4 (1) (except guidance)
substitute
(1) For a position that is ‘long cash and long put’ or ‘short cash and long
call’, the capital charge is calculated by multiplying the market value
of the underlying security by the sum of the specific and general risk
VZ Islamic Banking Business Prudential (Consequential) and
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page 27
capital charges for the underlying, and then subtracting the amount
by which the option is in-the-money (bounded at zero).
Explanatory note
This amendment clarifies the intended meaning of the subrule.
[2.31] Rule 6.6.4 (3)
omit
table 6.6.4,
insert
table 6.6.4:
Explanatory note
This amendment corrects a minor punctuation error.
[2.32] Rule 6.6.5 (2)
omit
(2) Futures and forward contracts are exempt from specific risk capital
charge if:
insert
(2) Futures and forward contracts (other than those mentioned in
subrule (1)) are exempt from specific risk capital charge if:
Explanatory note
This amendment clarifies the intended operation of the rule.
[2.33] Rule 7.1.7 (5) (a)
substitute
(a) realised profits from the sale of securities in the banking book;
(aa) realised profits from securities in the ‘Held to Maturity’
category in the banking book;
Explanatory note
This amendment clarifies the kinds of realised profits excluded from a firm’s gross income for
the purposes of the rule.
page 28 Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015 VZ
[2.34] Rule 10.2.3 (excluding examples)
substitute
10.2.3 Solo limits to apply to group
Unless the Regulatory Authority directs otherwise, a prudential limit
in these rules that applies to a banking business firm also applies to
the firm’s financial group.
Explanatory note
This amendment removes an unnecessary restriction on the interpretation of prudential limits.
[2.35] Glossary, definition of external credit rating agency, paragraphs (d) and (e)
substitute
(d) a rating agency that is affiliated with one of the agencies
mentioned in paragraphs (a) to (c);
(e) Islamic International Rating Agency, B.S.C; and
(f) any other agency approved by the Regulatory Authority.
Explanatory note
This amendment updates a definition.
VZ Islamic Banking Business Prudential (Consequential) and
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Schedule 3 Miscellaneous and technical amendments
(see r 3)
Part 3.1 Anti-Money Laundering and Combating Terrorist Financing (General Insurance) Rules 2012
[3.1] Rule 1.3.1 (including the note)
omit
QFC
insert
QFC
Explanatory note
This amendment and the next omit unnecessary italics.
[3.2] Glossary, definition of this jurisdiction
omit
QFC
insert
QFC
[3.3] Glossary
insert
QFC means Qatar Financial Centre.
Explanatory note
This amendment inserts a definition of a term used in the Rules but not defined in them.
page 30 Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015 VZ
Part 3.2 Banking Business Prudential Rules 2014
[3.4] Rule 1.1.5 (1)
omit
banking business firm that is branch
insert
banking business firm that is a branch
Explanatory note
This amendment corrects a typographical error.
[3.5] Rule 1.3.5 (except the note)
substitute
1.3.5 Legal form that firms must take
(1) A deposit-taker must be:
(a) a limited liability company incorporated under the Companies
Regulations 2005; or
(b) a branch registered with the QFC Companies Registration
Office.
(2) An investment dealer must be:
(a) a limited liability company incorporated under the Companies
Regulations 2005;
(b) a branch registered with the QFC Companies Registration
Office; or
(c) a limited liability partnership incorporated under the Limited
Liability Partnerships Regulations 2005.
Explanatory note
This amendment clarifies the intended effect of the rule.
VZ Islamic Banking Business Prudential (Consequential) and
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[3.6] Rule 2.1.2, guidance
omit
Explanatory note
This amendment removes guidance now considered unnecessary.
[3.7] Rule 3.1.3 (2) (b), note
substitute
Note Financial resources is a broader concept than capital resources.
Financial resources could include liquid assets (such as cash in
hand), irrevocable lines of credit and irrevocable guarantees.
Explanatory note
This amendment clarifies the note.
[3.8] Rule 3.2.8, note
omit
interim profit or loss.
insert
appropriated profit or loss.
Explanatory note
This amendment corrects a minor drafting error.
[3.9] Rule 3.2.9 (7)
after
Non-payment
insert
of distributions
Explanatory note
This amendment clarifies the intended meaning of the rule.
[3.10] Rule 3.2.11 (1)
omit
issued by a banking business firm
page 32 Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015 VZ
Explanatory note
This amendment clarifies the intended operation of the rule, which also applies to certain
instruments not issued by the firm itself.
[3.11] Rule 3.2.11 (16) (except the note)
substitute
(16) If the instrument is issued by a special purpose vehicle, the proceeds
are immediately available without limitation to the firm through an
instrument that satisfies the other criteria for additional tier 1 capital.
Explanatory note
This amendment clarifies the intended operation of the subrule, which applies to certain
instruments not issued by the firm itself.
[3.12] Rule 3.2.12 (e)
after
risk-weighted assets
insert
for credit risk,
Explanatory note
This amendment clarifies the intended meaning of the rule.
[3.13] Rule 3.2.13 (1)
omit
issued by a banking business firm
Explanatory note
This amendment clarifies the intended operation of the rule, which also applies to certain
instruments not issued by the firm itself.
[3.14] Rule 3.2.13 (11) (except the note)
substitute
(11) If the instrument is issued by a special purpose vehicle, the proceeds
are immediately available without limitation to the firm through an
instrument that satisfies the other criteria for tier 2 capital.
VZ Islamic Banking Business Prudential (Consequential) and
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Explanatory note
This amendment clarifies the intended operation of the subrule, which applies to certain
instruments not issued by the firm itself..
[3.15] Rule 3.2.24, note
omit
(threshold deduction rule).
insert
(Deductions from common equity tier 1 capital).
Explanatory note
This amendment and the next correct cross-references.
[3.16] Rule 3.2.25 (2), note
omit
(threshold deduction rule).
insert
(Deductions from common equity tier 1 capital).
[3.17] Rule 3.2.37 (2)
omit
shares or other instruments that qualify as capital of an entity
concerned.
insert
shares, or other instruments that qualify as capital, of an entity
concerned.
Explanatory note
This amendment clarifies the meaning of the provision.
[3.18] Rule 3.2.37 (4)
omit
5 working days
insert
5 business days
page 34 Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015 VZ
Explanatory note
This amendment and the next correct minor drafting errors.
[3.19] Rule 3.2.37 (5)
omit
CET 1.
insert
CET 1 capital.
[3.20] Rule 3.2.39 (2) (including the note)
substitute
(2) A banking business firm must deduct the total amount of investments
in the entity concerned (other than investments in common shares, or
other instruments that qualify as CET 1 capital, of the entity).
Note For the treatment of investments in common shares, or other instruments
that qualify as CET 1 capital, of an entity concerned, see rule 3.2.41
(Deductions from common equity tier 1 capital).
Explanatory note
This amendment clarifies the meaning of the provision.
[3.21] Rule 3.2.39 (4)
omit
5 working days
insert
5 business days
Explanatory note
This amendment and the next correct minor drafting errors.
[3.22] Rule 3.2.39 (5)
omit
CET 1.
insert
CET 1 capital.
VZ Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015
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Explanatory note
This amendment and the next correct minor drafting errors.
[3.23] Rule 3.2.40 (1)
omit
concerned entities
insert
entities concerned
[3.24] Rule 3.2.41 (2) (a)
omit
common shares or other instruments that qualify as CET 1 capital of
an unconsolidated entity concerned;
insert
common shares, or other instruments that qualify as CET 1 capital, of
an unconsolidated entity concerned;
Explanatory note
This amendment clarifies the meaning of the provision.
[3.25] Rule 3.3.1 (3)
substitute
(3) The counter-cyclical capital buffer is a macroprudential tool that can
be used to mitigate the build-up of a system-wide risk such as excess
aggregate credit growth. It is intended to ensure that the banking
system has a buffer of capital to protect it against future potential
losses.
Explanatory note
This amendment clarifies the meaning of the subrule.
[3.26] Rule 3.3.5 (1)
omit
associated with
page 36 Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015 VZ
insert
such as
Explanatory note
This amendment clarifies the meaning of the subrule.
[3.27] Rule 4.2.2 (d) (i)
omit
continuous
insert
regular
Explanatory note
This amendment clarifies the intended meaning of the rule.
[3.28] Table 4.4.7A, items 3 and 4
substitute
3 claims on public sector enterprises:
(a) claims on non-commercial public sector
enterprises in Qatar
0
(b) claims on non-commercial public sector
enterprises in other GCC countries,
denominated in the relevant enterprise’s
domestic currency
0
(c) claims on non-commercial public sector
enterprises in other GCC countries, not
denominated in the relevant enterprise’s
domestic currency
based on
ECRA rating
(d) claims on other sovereign non-
commercial public sector enterprises
based on
ECRA rating
(e) claims on commercial public sector
enterprises
based on
ECRA rating
VZ Islamic Banking Business Prudential (Consequential) and
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4 claims on multilateral development banks:
(a) claims on multilateral development banks
eligible for 0% risk-weight
0
(b) claims on other multilateral development
banks
based on
ECRA rating
Explanatory note
This amendment clarifies the intended meaning of the items.
[3.29] Table 4.4.7B, item 2
substitute
2 claims on
non-
commercial
public sector
enterprises in
other GCC
countries, not
denominated
in the relevant
enterprise’s
domestic
currency
0 20 50 100 100 150 100
Explanatory note
This amendment clarifies the intended meaning of the item.
[3.30] Rule 4.5.5 (1)
omit
tables 4.5.5A and 4.5.5B
insert
this rule
Explanatory note
This amendment is consequential on other changes to the rule.
page 38 Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015 VZ
[3.31] Table 4.5.5A, items 3 and 4
substitute
3 BB+ to BB-
(long-term)
All 15 Not
applicable
4 securities
issued by the
State of Qatar
or the Qatar
Central Bank
≤1 year 1 Not
applicable
>1 year,
≤5 years
3 Not
applicable
>5 years 6 Not
applicable
Note Table 4.5.5A item 3, column 5: securities rated BB+ or below are eligible
financial collateral only if issued by a sovereign or non-commercial
public sector enterprise—see rule 4.5.7 (1) (c) (i).
Explanatory note
This amendment clarifies the meaning of the table by specifying cases where it does not apply.
[3.32] Table 4.5.5B, heading and column headings
substitute
Table 4.5.5B Haircuts for other assets
column 1
item
column 2
description of assets
column 3
haircut
%
Explanatory note
This amendment inserts headings that more accurately reflect the purpose of the table.
[3.33] Table 4.5.5B, item 5
omit
Explanatory note
This amendment omits an unnecessary item.
VZ Islamic Banking Business Prudential (Consequential) and
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[3.34] Rule 4.5.5 (3) and (4)
substitute
(3) If a CRM technique (other than a guarantee) and the exposure covered
by it are denominated in different currencies (that is, there is a
currency mismatch between them), the haircut that applies is:
(a) if the mismatched currencies are both pegged to the same
reference currency, or 1 of them is pegged to the other—0; or
(b) in any other case—8%.
(4) If there is a currency mismatch between a guarantee and the exposure
covered by it, the amount of the exposure that is covered must be
reduced using the following formula:
HfxG 1
where:
G is the nominal amount of the guarantee.
Hfx is the haircut appropriate for the currency mismatch between the
credit protection and the underlying obligation, as follows:
(a) if the guarantee is revalued every 10 business days—8%;
(b) if the guarantee is revalued at any longer interval—the factor H
calculated using the formula in subrule (5); or
(c) if the mismatched currencies are both pegged to the same
reference currency, or if 1 of them is pegged to the other—0.
(5) If the guarantee is revalued at intervals longer than 10 business days,
the 8% haircut must be scaled up using the following formula:
10
98 NH
where:
H is the scaled-up haircut.
N is the number of business days between the revaluations.
Explanatory note
This amendment clarifies the intended meaning of the subrules.
page 40 Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015 VZ
[3.35] Rule 4.5.12 (1) (b) (i)
omit
sovereign securities;
insert
sovereign securities that are eligible for zero per cent risk-
weight;
Explanatory note
This amendment clarifies the intended meaning of the paragraph.
[3.36] Rule 4.5.13, guidance 2
substitute
2 The method and frequency of monitoring and revaluation depend on the nature
and condition of the collateral (see rule 4.5.7 (2)). For example, securities
accepted as collateral are usually marked to market daily.
Explanatory note
This amendment clarifies the intended meaning of the paragraph.
[3.37] Rule 4.7.1
omit
expected loss
insert
expected losses
Explanatory note
This amendment corrects a typographical error.
[3.38] Rule 4.7.3 (3)
after
that in total
insert
at least
Explanatory note
This amendment clarifies the meaning of the subrule.
VZ Islamic Banking Business Prudential (Consequential) and
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[3.39] Table 4.7.3, column headings
substitute
column 1 item
column 2 category
column 3 minimum provisioning requirement (% of the unsecured part of the credit)
Explanatory note
This amendment substitutes new column headings to conform with rule 4.7.3 (3), as amended.
[3.40] Chapter 5 (heading)
substitute
Chapter 5 Concentration risk and related matters
Explanatory note
This amendment substitutes a new heading better reflecting the content of the Chapter.
[3.41] Part 5.3 (heading)
substitute
Part 5.3 Management of exposures Explanatory note
This amendment substitutes a new heading better reflecting the content of the Part.
[3.42] Rule 5.3.1 (heading)
substitute
5.3.1 Calculating exposures
Explanatory note
This amendment substitutes a new heading better reflecting the content of the rule.
[3.43] Rule 5.3.1 (3) (a)
substitute
(a) the outstanding balances of all loans and advances, including
balances with other banks;
page 42 Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015 VZ
Explanatory note
This amendment and the next clarify the intended meaning of the subrule.
[3.44] Rule 5.3.1 (3) (c)
substitute
(c) unused off-balance-sheet commitments, whether revocable or
irrevocable; and
[3.45] Rule 5.3.1 (4)
substitute
(4) However, in calculating the gross exposure, do not include:
(a) claims, equity investments and other exposures deducted from
the firm’s capital;
(b) exposures arising in the course of settlement of market-related
contracts; and
(c) exposures that have been written off.
(5) For this Part:
(a) a banking business firm must treat an exposure as reduced (to
the extent permitted by Part 4.5) by any applicable CRM
technique; and
(b) a banking business firm that is part of a financial group may
offset intragroup amounts due to other deposit takers within the
group.
Explanatory note
This amendment clarifies the intended meaning of the subrule.
[3.46] Rule 5.3.3 (heading)
substitute
5.3.3 Limits on exposures
Explanatory note
This amendment substitutes a heading that more accurately reflects the substance of the rule after
other amendments.
VZ Islamic Banking Business Prudential (Consequential) and
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[3.47] Rule 5.3.3 (2) (including the note)
substitute
(2) The total of the firm’s net exposures to any 1 counterparty or any
1 group of connected counterparties must not exceed 25% of the
firm’s regulatory capital.
(2A) The total of all of the firm’s net large exposures must not exceed
800% of that capital.
Note Subrules (2) and (2A) do not apply to a branch. A branch is not required
to hold regulatory capital—see rule 3.1.2 (1).
Explanatory note
This amendment clarifies the intended meaning of the former subrule.
[3.48] Rule 6.1.4 (2) (a)
omit
trading book; or
insert
trading book; and
Explanatory note
This amendment corrects a drafting error.
[3.49] Rule 6.1.4 (6)
omit
The value of a position in an investment is the investment’s quoted
price.
Explanatory note
This amendment omits some words now considered unnecessary.
[3.50] Rule 6.1.7 (3)
omit
A banking business firm that is required to have a trading book
page 44 Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015 VZ
insert
The firm
Explanatory note
This amendment omits some unnecessary words.
[3.51] Rule 6.2.3 (1)
substitute
(1) If a banking business firm is assessing its foreign exchange risk on a
consolidated basis, and the inclusion of the currency positions of a
marginal operation of the firm is technically impractical, the firm may
use, as a proxy for those positions, the internal limit in each currency
that the firm applies to the operation. Marginal operation, in relation
to a firm, is an operation that accounts for less than 5% of the firm’s
total currency positions.
Explanatory note
This amendment clarifies the intended effect of the subrule.
[3.52] Rule 6.4.2 (3) (a) and (b)
substitute
(a) the commodities are deliverable against each other; or
(b) the commodities are close substitutes for each other and a
minimum correlation between price movements of 0.9 can be
clearly established over at least the preceding year.
Explanatory note
This amendment clarifies the intended effect of the subrule.
[3.53] Rule 9.1.5 (2) (c) (iii)
omit
active;
insert
active; and
Explanatory note
This amendment corrects a typographical error.
VZ Islamic Banking Business Prudential (Consequential) and
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[3.54] Rule 9.1.11 (1) (b)
omit
particular currency.
insert
particular foreign currency.
Explanatory note
This amendment corrects a minor drafting error.
[3.55] Rule 9.1.11 (2)
omit
business in a foreign currency is significant,
insert
business in a currency is significant,
Explanatory note
This amendment corrects a minor drafting error.
[3.56] Rule 10.2.3, examples
substitute
Examples
1 The restriction in rule 5.3.3 (2) (that the total of a banking business firm’s net
exposures to a counterparty or connected counterparties must not exceed 25%
of its regulatory capital) applies to the firm’s financial group, so that the
group’s net exposures to a counterparty or connected counterparties must not
exceed 25% of the group’s regulatory capital.
2 Similarly, the restriction in rule 5.3.3 (2A) (that the total of all of the firm’s
net large exposures must not exceed 800% of its regulatory capital) applies to
the firm’s financial group, so that the group’s total net large exposures to
counterparties or connected counterparties must not exceed 800% of the
group’s regulatory capital.
Explanatory note
This amendment updates the examples consequent to other amendments.
[3.57] Glossary, definition of home jurisdiction
omit
granted
page 46 Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015 VZ
insert
granted.
Explanatory note
This amendment inserts missing punctuation.
Part 3.3 Conduct of Business Rules 2007
[3.58] Rule 2.2.1 (2)
after
of the firm
insert
(or of a related firm)
Explanatory note
This amendment and the next allow employees of another member of an authorised firm’s group
to perform the customer-facing function for the firm.
[3.59] Rule 2.2.2 (2) (a)
after
of the firm
insert
(or of a related firm)
[3.60] Table 4.3.17, first column header
omit
QR
Explanatory note
This amendment removes an unnecessary use of “QR” in the year column.
VZ Islamic Banking Business Prudential (Consequential) and
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Part 3.4 General Rules 2005
[3.61] Rule 5.3.2 (4) (d) (ii)
omit
in accordance rule
insert
in accordance with rule
Explanatory note
This amendment inserts a missing word.
[3.62] Rule 5.3.3 (4) (b) (v)
omit
otherwise
insert
is otherwise
Explanatory note
This amendment inserts a missing word.
[3.63] Rule 8.3.2 (1) (c)
omit
or less;
insert
or less; or
Explanatory note
This amendment inserts a missing word.
[3.64] Rule 9.3.1
omit
such
Explanatory note
This amendment corrects a minor grammatical error.
page 48 Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015 VZ
[3.65] Rule 9.3.2
omit
AAOIFI.
insert
AAOIFI or any other accounting standards approved in writing by the
Regulatory Authority.
Explanatory note
This amendment allows for firms to use other approved accounting standards.
[3.66] Rule 9.4.1
omit
four months
insert
3 months
Explanatory note
This amendment amends the period within which an authorised firm’s financial records must be
audited.
[3.67] Before rule 9.6.1
omit
QFC entity
Explanatory note
This amendment removes a heading that does not conform to current practice. A heading in
accordance with current practice is inserted by a later amendment.
[3.68] Rule 9.6.1
omit
which is QFC entity
insert
which is a QFC entity
Explanatory note
This amendment corrects a minor grammatical error.
VZ Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015
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[3.69] Before rule 9.6.2
omit
Non–QFC entity
Explanatory note
This amendment removes a heading that does not conform to current practice. A heading in
accordance with current practice is inserted by a later amendment.
[3.70] Rule 10.2.2
omit
for each month, or part of a month,
insert
for each month, or part of a month,
Explanatory note
This amendment removes unnecessary italics.
[3.71] Before rule A4.4.1
omit
Initial Annual Fee
Explanatory note
This amendment and the next 2 remove headings that do not conform to current practice.
Headings in accordance with current practice are inserted by later amendments.
[3.72] Before rule A4.4.2
omit
Subsequent Annual Fees
[3.73] Before rule A4.4.3
omit
Provision of Extracts of Information from the Registers of Public Information
page 50 Islamic Banking Business Prudential (Consequential) and
Miscellaneous Amendments Rules 2015 VZ
[3.74] Glossary
insert
AAOIFI means the Accounting and Auditing Organisation for
Islamic Financial Institutions.
ISFI means the Islamic Finance Rules 2005.
Islamic financial business means the business of carrying on 1 or
more regulated activities in accordance with Shari’a.
Islamic financial institution has the meaning given by ISFI,
rule 1.2.2.
Islamic window has the meaning given by ISFI, rule 8.1.1.
month means calendar month—that is, the period beginning at the
start of any day of one of the 12 named months of the year and ending:
(a) at the end of the day before the corresponding day on the next
named month; or
(b) if there is no corresponding day—at the end of the last day of
next named month.
Explanatory note
This amendment inserts a definition of a term used in the rules but not previously defined in them.
[3.75] Other minor amendments—italics and capitalisation
amendments in accordance with the following table
Provision omit insert
Rule 9.3.1 Rules 9.3.2 and 9.3.3, rules 9.3.2 and 9.3.3,
Rule 9.3.2 Islamic financial
institution
Islamic financial
institution
Rule 9.3.3 Islamic window Islamic window
Rule 9.3.3 AAOIFI AAOIFI
Rule 9.3.3 Islamic financial business Islamic financial
business
Rule 9.3.3, guidance AAOIFI AAOIFI
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Provision omit insert
Rule 9.3.3, guidance Islamic financial business Islamic financial
business
Rule 9.5.1 (1) (A) (i)
and (ii)
Islamic financial business Islamic financial
business
Rule
9.5.1 (1) (A) (ii)
AAOIFI AAOIFI
Rule 9.5.1 (2),
definition of
applicable relevant
standards,
paragraphs (a) and
(b)
Islamic financial business Islamic financial
business
Rule 9.5.1 (2),
definition of
applicable relevant
standards,
paragraph (b)
AAOIFI AAOIFI
Rule 10.7.1 (2) (e) ISFI ISFI
Rule A4.4.2 (1) Rule A4.4.1. rule A4.4.1.
Rule A4.4.3 Rule 10.6.1, rule 10.6.1,
Explanatory note
The amendments made by the table remove unnecessary italics and capitalisation.
[3.76] Headings to rules
for each rule specified in column 1 of the table, insert the heading in
column 2
Column 1
rule
Column 2
heading
2.1.1 Application—Chapter 2
2.2.1 What applicant must demonstrate
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Column 1
rule
Column 2
heading
2.3.1 What Regulatory Authority will consider
2.4.1 When applicant must be body corporate
3.1.1 Regulatory status not to be misrepresented
3.1.2 Disclosures that must be in business documents
3.5.1 Certain extracts to be evidence
9.1.1 Application—Chapter 9
9.2.1 Matters about which accounting records must be kept
9.2.2 How long accounting records must be retained
9.3.1 Accounting standards generally
9.3.2 Accounting standards—Islamic financial institutions
9.3.3 Accounting standards—firms that operate Islamic windows
9.6.1 Change in financial year end—QFC entity
9.6.2 Change in financial year end—non-QFC entity
10.1.1 Application—Chapter 10
10.2.1 Application not submitted until fee paid
10.2.2 Increase of sum due if fee not paid
10.2.3 Regulatory Authority’s power to reduce or waive fees
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Column 1
rule
Column 2
heading
10.3.1 Regulatory Authority may require supplementary fees in certain cases
10.4.1 What application fees are payable
10.4.2 Fees not refundable
10.5.1 What annual fees are payable
10.5.2 When annual fees payable
10.6.1 Fees payable for extracts from Regulatory Authority registers
A4.1.1 Base fees
A4.2.2 Application fee for approval of individuals
A4.3.1 Fees for application—firm to conduct additional regulated activities
A4.4.1 Initial annual fee
A4.4.2 Subsequent annual fees
A4.4.3 Fee for extracts from Regulatory Authority registers
Part 3.5 Individuals (Assessment, Training and Competency) Rules 2014
[3.77] Rule 4.1.7 (1) (except the note)
substitute
(1) Subject to subrule (6), an authorised firm must maintain a register of
all the individuals who perform the customer-facing function for it.
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Explanatory note
This amendment and the next provide an exception from the obligation to enter in the register the
names of certain individuals who perform the customer-facing function only in relation to
business customers.
[3.78] After subrule 4.1.7 (5)
insert
(6) The firm need not make an entry in the register for an individual who:
(a) is employed by a related firm, or is employed by the firm but is
not ordinarily resident in Qatar; and
(b) performs the customer-facing function for the firm:
(i) only in relation to business customers; and
(ii) only infrequently, and in any event in no more than
3 transactions in any 1 calendar year.
Part 3.6 Insurance Business Rules 2006
[3.79] Rule 1.2.7 (b) (including the note)
substitute
(b) a QFC insurer operating an Islamic window (within the meaning
given by ISFI, rule 8.1.1).
Note 1 QFC insurer is defined in r 1.2.3.
Note 2 ISFI rule 8.1.1 is as follows:
8.1.1 What is an Islamic window?
If an authorised firm conducts a part (but not the whole) of its business in
accordance with Shari’a, the part so conducted is an Islamic window.
Explanatory note
This amendment inserts a definition of the term Islamic window, which is used only once in these
Rules, to avoid the need for readers to refer to the definition in ISFI.
[3.80] Rule 6.1.1 (2), guidance 1
omit
ISFI
VZ Islamic Banking Business Prudential (Consequential) and
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insert
ISFI
Explanatory note
This amendment and the next 3 remove unnecessary italics.
[3.81] Part 6.6, guidance 2
substitute
AAOIFI
insert
AAOIFI
[3.82] Rule 6.6.1 (2)
omit
AAOIFI
insert
AAOIFI
[3.83] Rule 8.4.2
omit
AAOIFI
insert
AAOIFI
[3.84] Rule 9.1.2 (1)
omit
an investigation
insert
an actuarial investigation
Explanatory note
This amendment and the next 3 provide clarity on the requirements for insurers’ periodic financial
condition reports.
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Miscellaneous Amendments Rules 2015 VZ
[3.85] After rule 9.1.2 (1)
insert
Guidance
An actuarial investigation is a full analysis of individual policy and claims data and
other relevant information using actuarial techniques to estimate technical
provisions.
[3.86] Rule 9.1.3 (3)
omit
the relevant professional standards.
insert
the relevant professional actuarial standards, and must use
appropriate actuarial valuation principles, techniques and
methodologies.
[3.87] Rule 9.1.3 (4) (d)
omit
rule 8.6.8;
insert
rule 8.6.8, using the relevant professional actuarial standards and
appropriate actuarial valuation principles, techniques and
methodologies;
[3.88] Glossary, definitions of Islamic financial business and Islamic financial institution
omit
ISFI
insert
ISFI
Explanatory note
This amendment removes unnecessary italics.
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[3.89] Glossary
insert
AAOIFI means the Accounting and Auditing Organisation for
Islamic Financial Institutions.
ISFI means the Islamic Finance Rules 2005.
Explanatory note
This amendment inserts 2 definitions.
[3.90] Headings to rules
for each rule specified in column 1 of the table, insert the heading in
column 2
Column 1
rule
Column 2
heading
1.5.1 Certain kinds of insurance business not to be combined
3.1.1 Application of Chapter 3
3.2.1 Insurers’ eligible capital
3.2.2 Insurers to have appropriate systems and controls
3.2.4 Insurers to be able to demonstrate compliance
3.8.3 Criteria for approving use of internal models
4.1.1 Application of Chapter 4
4.2.1 Calculating eligible capital
4.2.2 Eligible capital calculation table
4.3.1 Components of tier 1 capital
4.4.3 Assumed amortisation of subordinated debt
4.5.1 Legal opinions on tier 2 capital instruments
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Column 1
rule
Column 2
heading
4.7.1 Instruments not to be included in tier 2 capital—exceeding 100% of tier 1 capital
4.7.2 Instruments not to be included in lower tier 2 capital—exceeding 50% of tier 1 capital
4.8.1 Tier 1 capital not to be reduced without approval
4.8.2 Capital plan to be provided
4.8.3 Notice to be given of proposed reduction of tier 2 capital
4.9.1 Dividends and distributions to be reported
5.1.1 Application of Chapter 5
5.2.1 Long term insurance funds to be established
5.2.3 Treatment of branches
5.3.1 Business to be attributed to long term insurance funds
5.3.2 Attribution of general insurance contracts
5.4.1 Separate identification of assets, liabilities, revenues and expenses
5.4.2 Recording of assets, liabilities, revenues and expenses
5.4.3 Attribution of assets not already attributed
5.4.4 Recording of revenues and expenses
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Column 1
rule
Column 2
heading
5.4.5 Accounting and other records to be maintained
5.5.1 Application of assets
5.5.2 Assets of long term insurance funds not to be transferred
5.5.3 Assets of long term insurance funds not to be distributed
5.5.4 Payment of dividends by insurers constituting single long term insurance funds
5.5.5 Assets not to be lent
5.5.6 Certain reinsurance-like arrangements prohibited
6.2.1 Takaful funds to be established
6.3.1 Takaful business to be attributed to takaful funds
6.4.1 Books of accounts to be maintained
6.4.2 Takaful entities—accounting and other records
6.4.3 Allocation of assets to takaful funds
6.4.4 Allocation of assets to takaful funds—exceptions
6.4.5 Transactions in assets to be fair
6.5.1 Prohibition on making or attributing loans
6.6.1 Policies about surpluses and deficits
6.6.2 When 2 or more policies permitted
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Column 1
rule
Column 2
heading
6.6.3 Copies of policies to be given to Regulatory Authority
6.6.4 Surplus or deficit to be determined annually
6.6.5 Reports of distributions of surplus or deficit to Regulatory Authority
6.6.6 When distributions not permitted
8.2.1 Assets may be valued lower
8.2.2 Liabilities may be valued higher
8.2.3 Approximation of values
8.2.4 Directions by Regulatory Authority
8.3.1 Classification of contracts
8.3.2 Classification of contracts falling into 2 or more categories
8.4.1 Recognition of assets and liabilities
8.4.2 Permitted bases of accounting
8.4.3 Assumptions and methods on which valuations depend
8.4.4 Actuarial principles
8.6.1 Application of Part 8.6
8.6.7 Treatment of premium liability
8.6.8 Treatment of value of future claims payments
8.6.9 Treatment of expected recoveries
8.6.10 Valuation of expected future payments
8.6.11 Valuation of expected future receipts
8.7.1 Application of Part 8.7
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Column 1
rule
Column 2
heading
8.7.9 Treatment of policy benefits due before solvency reference date
8.7.10 Treatment of net value of future policy benefits
8.7.12 Valuation of future payments
8.7.13 Valuation of future receipts
8.7.14 Limit of operation of rule 8.7.10
11.2.1 What scheme reports must include
11.3.1 Parties that must ensure notification requirements met
11.3.2 Notices of intention
11.3.3 Provision to policyholders of scheme report summary
12.1.1 Application of Chapter 12
12.1.2 Meanings of terms relating to run-off
12.1.3 Compliance with Chapter 12 by insurer directed to go into run-off
12.1.4 Certain contracts to be disregarded
12.2.1 Application of Part 12.2
12.2.2 Insurers to give notice of decision to cease business
12.2.3 Insurers in run-off not to effect certain contracts
12.3.1 Application of Part 12.3
12.3.2 Insurer voluntarily in run-off to provide run-off plan
12.3.3 Insurer directed to go into run-off to provide run-off plan
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Column 1
rule
Column 2
heading
12.3.4 What run-off plans must cover
12.3.5 Application of run-off plan to fund
12.3.7 Regulatory Authority may direct insurer to amend run-off plan
12.5.1 Insurer in run-off not to make distributions
A3.2.2 Effect of guarantee or collateral
A3.2.3 Assets subject to mortgage or charge
A3.4.1 When off-balance sheet asset risk component must be calculated
A3.4.2 How to calculate off-balance sheet asset risk component
A3.4.3 Amount of off-balance sheet asset risk component for derivative contract
A3.4.4 Asset equivalent value
A3.5.1 How to calculate off-balance sheet liability risk component
Part 3.7 Interpretation and Application Rules 2005
[3.91] Glossary
omit the following definitions
AAOIFI
Glossary
Independent Person
Islamic financial business
Islamic financial institution
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Islamic window
Explanatory note
This amendment removes unnecessary definitions.
Part 3.8 Islamic Finance Rules 2005
[3.92] Rule 6.1.4 (c)
omit
authorised firm has deemed
insert
Islamic financial institution considers
Explanatory note
This amendment and the next 5 replace references to “authorised firm” with the more accurate
“Islamic financial institution” and make consequential changes.
[3.93] Rule 6.2.2 (2)
omit
4 months
insert
3 months
Explanatory note
This amendment amends the period within which an authorised firm must give the annual report
of its Shari’a supervisory board to the Regulatory Authority.
[3.94] Rule 6.3.1
omit
An authorised firm
insert
An Islamic financial institution
Explanatory note
This amendment and the next 4 replace references to “authorised firm” with the more accurate
“Islamic financial institution” and make consequential changes.
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[3.95] Rule 6.3.1
omit
the authorised firm complies
insert
the institution complies
[3.96] Rule 6.3.1
omit
the authorised firm’s
insert
its
[3.97] Rule 6.3.4
omit
An authorised firm
insert
An Islamic financial institution
[3.98] Rule 6.3.4 (a)
omit
the internal audit function or the compliance function of the
authorised firm; and
insert
its internal audit function or compliance function; and
[3.99] Rule 8.1.4 (2) (a)
omit
rule 3.1.1As
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Miscellaneous Amendments Rules 2015
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insert
rule 3.1.1A
Explanatory note
This amendment corrects a typographical error.
[3.100] Glossary
insert
AAOIFI means the Accounting and Auditing Organisation for
Islamic Financial Institutions.
month means calendar month—that is, the period beginning at the
start of any day of one of the 12 named months of the year and ending:
(a) at the end of the day before the corresponding day on the next
named month; or
(b) if there is no corresponding day—at the end of the last day of
next named month.
QFC means Qatar Financial Centre.
Explanatory note
This amendment inserts definitions of terms used in the rules but not previously defined in them.
[3.101] Headings to rules
for each rule specified in column 1 of the table, insert the heading in
column 2
Column 1
Rule
Column 2
heading
3.1.1 Disclosure about Shari’a supervisory board
3.1.2 When disclosure must be made
3.1.3 Disclosure by Islamic insurers
6.1.1 Appointment of Shari’a supervisory board
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Column 1
Rule
Column 2
heading
6.1.2 Policy in relation to Shari’a supervisory board
6.1.4 Records of assessment of competency of Shari’a supervisory board
6.1.5 Independence of Shari’a supervisory board
6.1.6 Information about Shari’a supervisory board to be given to Regulatory Authority
6.1.7 Obligation to assist Shari’a supervisory board
6.2.1 Shari’a reviews to be undertaken
6.2.2 Annual Shari’a report
6.3.1 Obligation to perform internal Shari’a reviews
6.3.2 How reviews to be performed
6.3.4 Who must perform internal Shari’a reviews
Explanatory note
The amendments made by the table insert headings into rules that presently have none.
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[3.102] Other minor amendments—italics
amendments in accordance with the following table
Provision omit insert
Rule
6.2.3 (2) (a) (ii) and
(b) (ii)
QFC QFC
Glossary, definition
of Regulatory
Authority
QFC QFC
Explanatory note
The amendments made by the table remove unnecessary italics.