IBANK (Consequential) Amendments Rules 2015 · Web viewAnti-Money Laundering and Combating Terrorist Financing (General Insurance) Rules 201229 Part 3.2 Banking Business Prudential

Islamic Banking Business Prudential (Consequential) and Miscellaneous Amendments Rules 2015QFCRA 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-ThaniChairman

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Islamic Banking Business Prudential (Consequential) and Miscellaneous Amendments Rules 2015QFCRA Rules 2015–3

made under theFinancial Services Regulations

ContentsPage

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 2Part 1.3 General Rules 2005 7Part 1.4 Governance and Controlled Functions Rules 2012 9Part 1.5 Investment Management and Advisory Rules 2014 9Part 1.6 Islamic Finance Rules 2005 16

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contents 1

Contents

pageSchedule 2 Amendments to Banking Business Prudential

Rules 2014 to align with IBANK 17

Schedule 3 Miscellaneous and technical amendments 29Part 3.1 Anti-Money Laundering and Combating Terrorist

Financing (General Insurance) Rules 2012 29Part 3.2 Banking Business Prudential Rules 2014 30Part 3.3 Conduct of Business Rules 2007 46Part 3.4 General Rules 2005 47Part 3.5 Individuals (Assessment, Training and Competency)

Rules 2014 53Part 3.6 Insurance Business Rules 2006 54Part 3.7 Interpretation and Application Rules 2005 62Part 3.8 Islamic Finance Rules 2005 63

contents 2 Islamic Banking Business Prudential (Consequential) andMiscellaneous Amendments Rules 2015

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1 Name of rulesThese rules are the Error: Reference source not found.

2 CommencementThese rules commence on 1 January 2016.

3 Rules amendedThese rules amend the Rules in Schedules 1 to 3.

4 Explanatory notesAn 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 banksubstituteQFC 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 noteThis amendment updates a definition.

Part 1.2 Banking Business Prudential Rules 2014

[1.1] Rule 1.1.4, guidance 1omit

in relation to its commercial conduct—Conduct of Business Rules 2007

in relation to an Islamic financial manager—Islamic Finance Rules 2005.

page 2 Islamic Banking Business Prudential (Consequential) andMiscellaneous Amendments Rules 2015

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insert in relation to its commercial conduct—Conduct of Business Rules

2007.Explanatory noteThis amendment and the next remove references to Islamic financial managers (which are now dealt with in the Islamic Banking Business Prudential Rules 2015 (IBANK)).

[1.2] Rule 1.1.4, guidance 2omit(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)

[1.3] 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 noteThis amendment substitutes a new rule that excludes the application of the rules to Islamic banking business.


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[1.4] 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 noteThis amendment and the next substitute new subrules that do not refer to Islamic financial management.

[1.5] 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.

[1.6] Rule 1.3.4 (including examples)omit

Explanatory noteThis amendment omits a rule applicable only to Islamic financial managers.

[1.7] Rule 2.1.6 (1)omitAAOIFI,

Explanatory noteThis amendment removes a reference to AAOIFI, which does not issue accounting standards for conventional banks.

[1.8] Rule 3.2.4 (a)substitute(a) for a deposit-taker—QR 35 million; or

Explanatory noteThis amendment substitutes a new paragraph that does not refer to Islamic financial management.


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[1.9] Rule 3.2.16 (1) (b)omitdeposit-taker, investment dealer or Islamic financial managerinsertdeposit-taker or investment dealer

Explanatory noteThis amendment removes a reference to Islamic financial managers.

[1.10] Rule 4.5.7 (2)omitevery 6 months.inserta month.

Explanatory noteThis amendment increases the frequency of marking collateral to market.

[1.11] Table 4.8.7, items 3 and 5omit each occurrence ofor Islamic financial manager

Explanatory noteThis amendment removes 4 references to Islamic financial managers.

[1.12] Rule 5.3.4 (including guidance)omit

Explanatory noteThis amendment removes a rule applicable only to Islamic financial managers.

[1.13] Rule 6.6.1, noteomit

Explanatory noteThis amendment removes a note applicable only to Islamic financial managers.


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[1.14] Rule 7.1.7 (4)omit

Explanatory noteThis amendment removes a subrule applicable only to Islamic financial managers.

[1.15] Rule 7.1.7 (5)omitdeposit-taker, investment dealer or Islamic financial manager,insertdeposit-taker or investment dealer,


[1.16] Rule 8.1.1, noteomit

Explanatory noteThis amendment removes a note applicable only to Islamic financial managers.

[1.17] Chapter 11omit

Explanatory noteThis amendment removes a Chapter applicable only to Islamic financial managers.

[1.18] Rule 13.1.2 (2), (3) and (4)omit

Explanatory noteThis amendment removes transitional provisions that are no longer required or apply only to Islamic financial managers.

[1.19] Glossary, definition of customer, paragraph (a)omitor Islamic financial manager



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[1.20] Glossaryomit the following definitionsAAOIFIIAHIslamic financial institutionIslamic financial managementIslamic financial managerprofit-sharing investment account (or PSIA)PSIArestricted PSIAunrestricted PSIA

Explanatory noteThis amendment removes definitions of terms that are no longer used in BANK.

Part 1.3 General Rules 2005[1.1] Rule 9.3.2

afteran Islamic financial institutioninsert(other than an Islamic bank or Islamic investment dealer, within the respective meanings of IBANK)

Explanatory noteThis amendment and the next remove the Rules’ application, to certain Islamic financial institutions, of requirements that are now dealt with in IBANK.

[1.2] 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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[1.3] 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 noteThis amendment inserts a requirement for a particular auditor’s certification for authorised firms to which IBANK applies.

[1.4] Schedule 2, after item 9insert

10 IBANK10.1 Prudential returns r 2.1.4 (Preparing returns)10.2 Shari’a compliance r 12.1.13 (Firm must give copy of report)

Explanatory noteThis amendment inserts references to reporting requirements in IBANK.

[1.5] Schedule 3, after item 13insert

14 IBANK14.1 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 noteThis amendment inserts references to record-keeping requirements in IBANK.

[1.6] GlossaryinsertIBANK means the Islamic Banking Business Prudential Rules 2015.

Explanatory noteThis amendment inserts a new definition.

Part 1.4 Governance and Controlled Functions Rules 2012

[1.1] Glossary, definition of QFC banksubstituteQFC 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.


Part 1.5 Investment Management and Advisory Rules 2014

[1.1] Rule 1.1.4substitute

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—generalSubject 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;


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(f) providing scheme administration (that is, providing scheme administration in relation to a collective investment scheme);

(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.

Guidance1 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


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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 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 noteThis 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.


(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 noteThis amendment substitutes a subrule including a reference to IBANK.

[1.3] Table 3.3.3omitArranging credit facilitiesinsertArranging financing facilities

Explanatory noteThis amendment updates a defined term.

[1.4] Rule 5.1.2 (2), noteomit

arranging credit facilities


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insert arranging financing facilities

Explanatory noteThis amendment updates a defined term.

[1.5] Glossary, definition of advising on investmentssubstituteadvising on investments includes:(a) the regulated activity described in FSR, Schedule 3, Part 2,

paragraph 11; and(b) advising on Islamic investments.

Explanatory noteThis amendment and the next 5 substitute new definitions to take account of the Rules’ coverage of activities in relation to Islamic investments.

[1.6] Glossary, definitions of arranging credit facilities and arranging deals in investmentssubstitutearranging 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.


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[1.7] Glossary, definition of arranging the provision of custody servicessubstitutearranging the provision of custody services includes:(a) the regulated activity described in FSR, Schedule 3, Part 2,

paragraph 9; and(b) arranging the provision of custody services in relation to

Islamic investments.

[1.8] Glossary, definition of dealing in investmentssubstitutedealing in investments includes:(a) the regulated activity described in FSR, Schedule 3, Part 2,

paragraph 4; and(b) dealing (as agent) in Islamic investments.

[1.9] Glossary, definition of managing investmentssubstitutemanaging investments includes:(a) the regulated activity described in FSR, Schedule 3, Part 2,

paragraph 10; and(b) managing Islamic investments.

[1.10] Glossary, definition of providing custody servicessubstituteproviding 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.


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[1.11] Glossary, definition of QFC banksubstituteQFC 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 noteThis amendment updates a definition.

[1.12] Glossary, definition of relevant investmentssubstituterelevant 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 noteThis amendment substitutes a new definition to take account of the Rules’ coverage of activities in relation to Islamic investments.

[1.13] GlossaryinsertIBANK means the Islamic Banking Business Prudential Rules 2015.


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investments includes Islamic investments.Islamic investments has the meaning given by rule 1.1.3A (2).

Explanatory noteThis amendment inserts 3 new definitions to take account of the Rules’ coverage of activities in relation to Islamic investments.

Part 1.6 Islamic Finance Rules 2005[1.1] After rule 1.1.2

insert

1.1.3 ApplicationThese 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 noteThis 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 2The amendments in this Schedule bring requirements in BANK into line with equivalent requirements in IBANK.

[2.1] Rule 3.2.11 (12)aftertrigger point.insertThe conversion must be made in accordance with rule 3.2.14.

Explanatory noteThis amendment gives detail about the conversion of certain debt instruments into equity.

[2.2] Rule 3.2.34 (2)omitif there isn’t enough capital at that category, from the next category up.insertif there is not enough capital at that category, from the next higher category.

Explanatory noteThis amendment substitutes more formal language in accordance with normal drafting practice.

[2.3] Rule 3.3.3 (2), examples 1 and 2substitute1 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


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20% of those earnings by way of dividends, share buybacks and discretionary bonus payments.

Explanatory noteThis 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 noteThis 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), exampleomit

Explanatory noteThis amendment removes a superfluous example.

[2.6] Rule 4.3.1, guidance 2omit

, or those solicited from a nominated ECRAExplanatory noteThis 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;


(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.


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[2.9] Rule 4.3.7 (3)omitits nominated ECRAsinsertan ECRA

[2.10] Rule 4.3.7 (3), exampleomita nominated ECRA

insertan ECRA

[2.11] After rule 4.3.7insert

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 noteThis amendment clarifies how ECRA assessments are to be used to determine risk-weights.

[2.12] Rule 4.4.1 (2)omita nominated ECRA


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insertan ECRA

Explanatory noteThis amendment and the next 2 clarify the requirements in relation to the use of credit ratings.

[2.13] Rule 4.4.4 (3)omitits nominated ECRAinsertan ECRA


(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 12substitute

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 noteThis amendment inserts some words descriptive of the relevant transactions.


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[2.16] Table 4.4.7A, item 15 (column 3)omit400insert150

Explanatory noteThis amendment substitutes a new risk-weight for certain assets.

[2.17] Before table 4.4.7BinsertNote 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 noteThis amendment inserts a note clarifying the intended operation of the table.

[2.18] Table 4.4.7B, headingsubstitute

Table 4.4.7B Risk-weights based on ratings determined by ECRAsExplanatory noteThis 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 noteThis amendment and the next 2 clarify the requirements in relation to the use of credit ratings.

[2.20] Rule 4.5.7 (1) (c)omitthe firm’s nominated ECRA,


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insertan ECRA,

[2.21] Rule 4.5.7 (1) (d)omitthe firm’s nominated ECRAinsertan ECRA

[2.22] Rule 5.3.1 (2), definition of gross exposure, paragraph (b)substitute(b) debt securities held by the firm;

Explanatory noteThis amendment corrects a drafting error.

[2.23] Before rule 6.1.1insert

Division 6.1.A Governing body, trading book and policies

Explanatory noteThis amendment inserts a heading reflecting the general nature of rules 6.1.1 to 6.1.10.

[2.24] Rule 6.1.1 (2), noteomit

Explanatory noteThis 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 noteThis 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 noteThis amendment provides detail about the operation of the rule.


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[2.27] Rule 6.1.11substitute

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 positions and exposures to. Mark-to-market means a valuation that is based on current market value.Guidance1 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.


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(2) The firm must be able to demonstrate that its marking-to-model is prudent.GuidanceA 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 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 verificationA 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.Guidance1 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.


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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;(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 noteThis 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 noteThis amendment clarifies the intended meaning of the paragraph.


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[2.29] Part 6.3, headingsubstitute

Part 6.3 Options riskExplanatory noteThis 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 capital charges for the underlying, and then subtracting the amount by which the option is in-the-money (bounded at zero).

Explanatory noteThis amendment clarifies the intended meaning of the subrule.

[2.31] Rule 6.6.4 (3)omittable 6.6.4,inserttable 6.6.4:

Explanatory noteThis 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:


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insert(2) Futures and forward contracts (other than those mentioned in

subrule (1)) are exempt from specific risk capital charge if:Explanatory noteThis 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 noteThis amendment clarifies the kinds of realised profits excluded from a firm’s gross income for the purposes of the rule.

[2.34] Rule 10.2.3 (excluding examples)substitute

10.2.3 Solo limits to apply to groupUnless 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 noteThis 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.



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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)omitQFCinsertQFC

Explanatory noteThis amendment and the next omit unnecessary italics.

[3.2] Glossary, definition of this jurisdictionomitQFCinsertQFC

[3.3] GlossaryinsertQFC means Qatar Financial Centre.

Explanatory noteThis amendment inserts a definition of a term used in the Rules but not defined in them.


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Part 3.2 Banking Business Prudential Rules 2014

[3.1] Rule 1.1.5 (1)omitbanking business firm that is branchinsertbanking business firm that is a branch

Explanatory noteThis amendment corrects a typographical error.

[3.2] 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 noteThis amendment clarifies the intended effect of the rule.


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[3.3] Rule 2.1.2, guidanceomit

Explanatory noteThis amendment removes guidance now considered unnecessary.

[3.4] Rule 3.1.3 (2) (b), notesubstitute

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 noteThis amendment clarifies the note.

[3.5] Rule 3.2.8, noteomitinterim profit or loss.

insertappropriated profit or loss.

Explanatory noteThis amendment corrects a minor drafting error.

[3.6] Rule 3.2.9 (7)afterNon-paymentinsertof distributions

Explanatory noteThis amendment clarifies the intended meaning of the rule.

[3.7] Rule 3.2.11 (1)omitissued by a banking business firm


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Explanatory noteThis amendment clarifies the intended operation of the rule, which also applies to certain instruments not issued by the firm itself.

[3.8] 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 noteThis amendment clarifies the intended operation of the subrule, which applies to certain instruments not issued by the firm itself.

[3.9] Rule 3.2.12 (e)afterrisk-weighted assetsinsertfor credit risk,


[3.10] Rule 3.2.13 (1)omitissued by a banking business firm

Explanatory noteThis amendment clarifies the intended operation of the rule, which also applies to certain instruments not issued by the firm itself.


(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.


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Explanatory noteThis amendment clarifies the intended operation of the subrule, which applies to certain instruments not issued by the firm itself..

[3.12] Rule 3.2.24, noteomit(threshold deduction rule).

insert(Deductions from common equity tier 1 capital).

Explanatory noteThis amendment and the next correct cross-references.

[3.13] Rule 3.2.25 (2), noteomit(threshold deduction rule).

insert(Deductions from common equity tier 1 capital).

[3.14] Rule 3.2.37 (2)omitshares or other instruments that qualify as capital of an entity concerned.insertshares, or other instruments that qualify as capital, of an entity concerned.

Explanatory noteThis amendment clarifies the meaning of the provision.

[3.15] Rule 3.2.37 (4)omit5 working daysinsert5 business days


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Explanatory noteThis amendment and the next correct minor drafting errors.

[3.16] Rule 3.2.37 (5)omitCET 1.insertCET 1 capital.


(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).


[3.18] Rule 3.2.39 (4)omit5 working daysinsert5 business days


[3.19] Rule 3.2.39 (5)omitCET 1.


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insertCET 1 capital.


[3.20] Rule 3.2.40 (1)omitconcerned entitiesinsertentities concerned

[3.21] Rule 3.2.41 (2) (a)omitcommon shares or other instruments that qualify as CET 1 capital of an unconsolidated entity concerned;insertcommon shares, or other instruments that qualify as CET 1 capital, of an unconsolidated entity concerned;



(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 noteThis amendment clarifies the meaning of the subrule.


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[3.23] Rule 3.3.5 (1)omitassociated withinsertsuch as


[3.24] Rule 4.2.2 (d) (i)omitcontinuousinsertregular



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


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(d) claims on other sovereign non-commercial public sector enterprises


(e) claims on commercial public sector enterprises


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


Explanatory noteThis amendment clarifies the intended meaning of the items.

[3.26] Table 4.4.7B, item 2substitute

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 noteThis amendment clarifies the intended meaning of the item.

[3.27] Rule 4.5.5 (1)omittables 4.5.5A and 4.5.5B


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insertthis rule

Explanatory noteThis amendment is consequential on other changes to the rule.


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 noteThis amendment clarifies the meaning of the table by specifying cases where it does not apply.

[3.29] Table 4.5.5B, heading and column headingssubstitute

Table 4.5.5B Haircuts for other assets

column 1item

column 2description of assets

column 3haircut%

Explanatory noteThis amendment inserts headings that more accurately reflect the purpose of the table.


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[3.30] Table 4.5.5B, item 5omit

Explanatory noteThis amendment omits an unnecessary item.

[3.31] 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:

G× (1 − Hfx )

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.


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(5) If the guarantee is revalued at intervals longer than 10 business days, the 8% haircut must be scaled up using the following formula:

H= 8√ N + 910

where:H is the scaled-up haircut.N is the number of business days between the revaluations.

Explanatory noteThis amendment clarifies the intended meaning of the subrules.

[3.32] Rule 4.5.12 (1) (b) (i)omit

sovereign securities;insert

sovereign securities that are eligible for zero per cent risk-weight;


[3.33] Rule 4.5.13, guidance 2substitute2 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.


[3.34] Rule 4.7.1omitexpected loss


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insertexpected losses


[3.35] Rule 4.7.3 (3)afterthat in totalinsertat least


[3.36] Table 4.7.3, column headingssubstitute

column 1item

column 2category

column 3minimum provisioning requirement(% of the unsecured part of the credit)

Explanatory noteThis amendment substitutes new column headings to conform with rule 4.7.3 (3), as amended.

[3.37] Chapter 5 (heading)substitute

Chapter 5 Concentration risk and related matters

Explanatory noteThis amendment substitutes a new heading better reflecting the content of the Chapter.


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[3.38] Part 5.3 (heading)substitute

Part 5.3 Management of exposuresExplanatory noteThis amendment substitutes a new heading better reflecting the content of the Part.

[3.39] Rule 5.3.1 (heading)substitute

5.3.1 Calculating exposuresExplanatory noteThis amendment substitutes a new heading better reflecting the content of the rule.

[3.40] Rule 5.3.1 (3) (a)substitute(a) the outstanding balances of all loans and advances, including

balances with other banks;Explanatory noteThis amendment and the next clarify the intended meaning of the subrule.

[3.41] Rule 5.3.1 (3) (c)substitute(c) unused off-balance-sheet commitments, whether revocable or

irrevocable; and


(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


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(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 noteThis amendment clarifies the intended meaning of the subrule.

[3.43] Rule 5.3.3 (heading)substitute

5.3.3 Limits on exposuresExplanatory noteThis amendment substitutes a heading that more accurately reflects the substance of the rule after other amendments.


(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 noteThis amendment clarifies the intended meaning of the former subrule.


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[3.45] Rule 6.1.4 (2) (a)omit

trading book; orinsert

trading book; andExplanatory noteThis amendment corrects a drafting error.

[3.46] Rule 6.1.4 (6)omitThe value of a position in an investment is the investment’s quoted price.

Explanatory noteThis amendment omits some words now considered unnecessary.

[3.47] Rule 6.1.7 (3)omitA banking business firm that is required to have a trading bookinsertThe firm

Explanatory noteThis amendment omits some unnecessary words.


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(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 noteThis amendment clarifies the intended effect of the subrule.

[3.49] 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 noteThis amendment clarifies the intended effect of the subrule.

[3.50] Rule 9.1.5 (2) (c) (iii)omitactive;insertactive; and


[3.51] Rule 9.1.11 (1) (b)omitparticular currency.


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insertparticular foreign currency.


[3.52] Rule 9.1.11 (2)omitbusiness in a foreign currency is significant,insertbusiness in a currency is significant,


[3.53] Rule 10.2.3, examplessubstituteExamples1 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 noteThis amendment updates the examples consequent to other amendments.

[3.54] Glossary, definition of home jurisdictionomitgrantedinsertgranted.


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Explanatory noteThis amendment inserts missing punctuation.

Part 3.3 Conduct of Business Rules 2007[3.1] Rule 2.2.1 (2)

afterof the firminsert(or of a related firm)

Explanatory noteThis amendment and the next allow employees of another member of an authorised firm’s group to perform the customer-facing function for the firm.

[3.2] Rule 2.2.2 (2) (a)afterof the firminsert(or of a related firm)

[3.3] Table 4.3.17, first column headeromitQR

Explanatory noteThis amendment removes an unnecessary use of “QR” in the year column.


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Part 3.4 General Rules 2005[3.1] Rule 5.3.2 (4) (d) (ii)

omitin accordance ruleinsertin accordance with rule

Explanatory noteThis amendment inserts a missing word.

[3.2] Rule 5.3.3 (4) (b) (v)omitotherwiseinsertis otherwise


[3.3] Rule 8.3.2 (1) (c)omitor less;insertor less; or


[3.4] Rule 9.3.1omitsuch

Explanatory noteThis amendment corrects a minor grammatical error.


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[3.5] Rule 9.3.2omitAAOIFI.insertAAOIFI or any other accounting standards approved in writing by the Regulatory Authority.

Explanatory noteThis amendment allows for firms to use other approved accounting standards.

[3.6] Rule 9.4.1omitfour monthsinsert3 months

Explanatory noteThis amendment amends the period within which an authorised firm’s financial records must be audited.

[3.7] Before rule 9.6.1omit

QFC entityExplanatory noteThis amendment removes a heading that does not conform to current practice. A heading in accordance with current practice is inserted by a later amendment.

[3.8] Rule 9.6.1omitwhich is QFC entityinsertwhich is a QFC entity

Explanatory noteThis amendment corrects a minor grammatical error.


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[3.9] Before rule 9.6.2omit

Non–QFC entityExplanatory noteThis amendment removes a heading that does not conform to current practice. A heading in accordance with current practice is inserted by a later amendment.

[3.10] Rule 10.2.2omitfor each month, or part of a month,insertfor each month, or part of a month,

Explanatory noteThis amendment removes unnecessary italics.

[3.11] Before rule A4.4.1omit

Initial Annual FeeExplanatory noteThis 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.


Subsequent Annual Fees


Provision of Extracts of Information from the Registers of Public Information


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[3.14] GlossaryinsertAAOIFI 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 noteThis amendment inserts a definition of a term used in the rules but not previously defined in them.

[3.15] Other minor amendments—italics and capitalisationamendments 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


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Rule 9.3.3 Islamic financial business Islamic financial business

Rule 9.3.3, guidance AAOIFI AAOIFI

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 noteThe amendments made by the table remove unnecessary italics and capitalisation.


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[3.16] Headings to rulesfor each rule specified in column 1 of the table, insert the heading in column 2Column 1rule

Column 2heading

2.1.1 Application—Chapter 22.2.1 What applicant must demonstrate2.3.1 What Regulatory Authority will consider2.4.1 When applicant must be body

corporate3.1.1 Regulatory status not to be

misrepresented3.1.2 Disclosures that must be in business

documents3.5.1 Certain extracts to be evidence9.1.1 Application—Chapter 99.2.1 Matters about which accounting

records must be kept9.2.2 How long accounting records must be

retained9.3.1 Accounting standards generally9.3.2 Accounting standards—Islamic

financial institutions9.3.3 Accounting standards—firms that

operate Islamic windows9.6.1 Change in financial year end—QFC

entity9.6.2 Change in financial year end—non-QFC

entity10.1.1 Application—Chapter 10


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Column 1rule

Column 2heading

10.2.1 Application not submitted until fee paid10.2.2 Increase of sum due if fee not paid10.2.3 Regulatory Authority’s power to reduce

or waive fees10.3.1 Regulatory Authority may require

supplementary fees in certain cases10.4.1 What application fees are payable10.4.2 Fees not refundable10.5.1 What annual fees are payable10.5.2 When annual fees payable10.6.1 Fees payable for extracts from

Regulatory Authority registersA4.1.1 Base feesA4.2.2 Application fee for approval of

individualsA4.3.1 Fees for application—firm to conduct

additional regulated activitiesA4.4.1 Initial annual feeA4.4.2 Subsequent annual feesA4.4.3 Fee for extracts from Regulatory

Authority registers


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Part 3.5 Individuals (Assessment, Training and Competency) Rules 2014


(1) Subject to subrule (6), an authorised firm must maintain a register of all the individuals who perform the customer-facing function for it.

Explanatory noteThis 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.

[3.2] 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[3.1] 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.


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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 noteThis 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.

[3.2] Rule 6.1.1 (2), guidance 1omitISFI

insertISFI

Explanatory noteThis amendment and the next 3 remove unnecessary italics.

[3.3] Part 6.6, guidance 2substituteAAOIFI

insertAAOIFI

[3.4] Rule 6.6.1 (2)omitAAOIFIinsertAAOIFI

[3.5] Rule 8.4.2omitAAOIFIinsertAAOIFI


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[3.6] Rule 9.1.2 (1)omitan investigationinsertan actuarial investigation

Explanatory noteThis amendment and the next 3 provide clarity on the requirements for insurers’ periodic financial condition reports.

[3.7] After rule 9.1.2 (1)insertGuidanceAn actuarial investigation is a full analysis of individual policy and claims data and other relevant information using actuarial techniques to estimate technical provisions.

[3.8] Rule 9.1.3 (3)omitthe relevant professional standards.insertthe relevant professional actuarial standards, and must use appropriate actuarial valuation principles, techniques and methodologies.

[3.9] Rule 9.1.3 (4) (d)omitrule 8.6.8;insertrule 8.6.8, using the relevant professional actuarial standards and appropriate actuarial valuation principles, techniques and methodologies;


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[3.10] Glossary, definitions of Islamic financial business and Islamic financial institutionomitISFIinsertISFI

Explanatory noteThis amendment removes unnecessary italics.

[3.11] GlossaryinsertAAOIFI means the Accounting and Auditing Organisation for Islamic Financial Institutions.ISFI means the Islamic Finance Rules 2005.

Explanatory noteThis amendment inserts 2 definitions.

[3.12] Headings to rulesfor each rule specified in column 1 of the table, insert the heading in column 2Column 1rule

Column 2heading

1.5.1 Certain kinds of insurance business not to be combined

3.1.1 Application of Chapter 33.2.1 Insurers’ eligible capital3.2.2 Insurers to have appropriate systems

and controls3.2.4 Insurers to be able to demonstrate

compliance3.8.3 Criteria for approving use of internal


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Column 1rule

Column 2heading

models4.1.1 Application of Chapter 44.2.1 Calculating eligible capital4.2.2 Eligible capital calculation table4.3.1 Components of tier 1 capital4.4.3 Assumed amortisation of subordinated

debt4.5.1 Legal opinions on tier 2 capital

instruments4.7.1 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 provided4.8.3 Notice to be given of proposed

reduction of tier 2 capital4.9.1 Dividends and distributions to be

reported5.1.1 Application of Chapter 55.2.1 Long term insurance funds to be

established5.2.3 Treatment of branches5.3.1 Business to be attributed to long term

insurance funds


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Column 1rule

Column 2heading

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 expenses5.4.5 Accounting and other records to be

maintained5.5.1 Application of assets5.5.2 Assets of long term insurance funds

not to be transferred5.5.3 Assets of long term insurance funds

not to be distributed5.5.4 Payment of dividends by insurers

constituting single long term insurance funds

5.5.5 Assets not to be lent5.5.6 Certain reinsurance-like arrangements

prohibited6.2.1 Takaful funds to be established6.3.1 Takaful business to be attributed to

takaful funds6.4.1 Books of accounts to be maintained6.4.2 Takaful entities—accounting and other

records


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Column 1rule

Column 2heading

6.4.3 Allocation of assets to takaful funds6.4.4 Allocation of assets to takaful funds—

exceptions6.4.5 Transactions in assets to be fair6.5.1 Prohibition on making or attributing

loans6.6.1 Policies about surpluses and deficits6.6.2 When 2 or more policies permitted6.6.3 Copies of policies to be given to

Regulatory Authority6.6.4 Surplus or deficit to be determined

annually6.6.5 Reports of distributions of surplus or

deficit to Regulatory Authority6.6.6 When distributions not permitted8.2.1 Assets may be valued lower8.2.2 Liabilities may be valued higher8.2.3 Approximation of values8.2.4 Directions by Regulatory Authority8.3.1 Classification of contracts8.3.2 Classification of contracts falling into

2 or more categories8.4.1 Recognition of assets and liabilities8.4.2 Permitted bases of accounting8.4.3 Assumptions and methods on which

valuations depend8.4.4 Actuarial principles


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Column 1rule

Column 2heading

8.6.1 Application of Part 8.68.6.7 Treatment of premium liability8.6.8 Treatment of value of future claims

payments8.6.9 Treatment of expected recoveries8.6.10 Valuation of expected future payments8.6.11 Valuation of expected future receipts8.7.1 Application of Part 8.78.7.9 Treatment of policy benefits due before

solvency reference date8.7.10 Treatment of net value of future policy

benefits8.7.12 Valuation of future payments8.7.13 Valuation of future receipts8.7.14 Limit of operation of rule 8.7.1011.2.1 What scheme reports must include11.3.1 Parties that must ensure notification

requirements met11.3.2 Notices of intention11.3.3 Provision to policyholders of scheme

report summary12.1.1 Application of Chapter 1212.1.2 Meanings of terms relating to run-off12.1.3 Compliance with Chapter 12 by insurer

directed to go into run-off12.1.4 Certain contracts to be disregarded12.2.1 Application of Part 12.2


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Column 1rule

Column 2heading

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 12.312.3.2 Insurer voluntarily in run-off to provide

run-off plan12.3.3 Insurer directed to go into run-off to

provide run-off plan12.3.4 What run-off plans must cover12.3.5 Application of run-off plan to fund12.3.7 Regulatory Authority may direct insurer

to amend run-off plan12.5.1 Insurer in run-off not to make

distributionsA3.2.2 Effect of guarantee or collateralA3.2.3 Assets subject to mortgage or chargeA3.4.1 When off-balance sheet asset risk

component must be calculatedA3.4.2 How to calculate off-balance sheet

asset risk componentA3.4.3 Amount of off-balance sheet asset risk

component for derivative contractA3.4.4 Asset equivalent valueA3.5.1 How to calculate off-balance sheet

liability risk component


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Part 3.7 Interpretation and Application Rules 2005

[3.1] Glossaryomit the following definitionsAAOIFIGlossaryIndependent PersonIslamic financial businessIslamic financial institutionIslamic window

Explanatory noteThis amendment removes unnecessary definitions.

Part 3.8 Islamic Finance Rules 2005[3.1] Rule 6.1.4 (c)

omitauthorised firm has deemedinsertIslamic financial institution considers

Explanatory noteThis amendment and the next 5 replace references to “authorised firm” with the more accurate “Islamic financial institution” and make consequential changes.

[3.2] Rule 6.2.2 (2)omit4 monthsinsert3 months


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Explanatory noteThis amendment amends the period within which an authorised firm must give the annual report of its Shari’a supervisory board to the Regulatory Authority.

[3.3] Rule 6.3.1omitAn authorised firminsertAn Islamic financial institution

Explanatory noteThis amendment and the next 4 replace references to “authorised firm” with the more accurate “Islamic financial institution” and make consequential changes.

[3.4] Rule 6.3.1omitthe authorised firm compliesinsertthe institution complies

[3.5] Rule 6.3.1omitthe authorised firm’sinsertits

[3.6] Rule 6.3.4omitAn authorised firminsertAn Islamic financial institution


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[3.7] Rule 6.3.4 (a)omitthe internal audit function or the compliance function of the authorised firm; andinsertits internal audit function or compliance function; and

[3.8] Rule 8.1.4 (2) (a)omitrule 3.1.1Asinsertrule 3.1.1A


[3.9] GlossaryinsertAAOIFI 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 noteThis amendment inserts definitions of terms used in the rules but not previously defined in them.


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[3.10] Headings to rulesfor each rule specified in column 1 of the table, insert the heading in column 2Column 1Rule

Column 2heading

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

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


VZ

Column 1Rule

Column 2heading

6.3.4 Who must perform internal Shari’a reviewsExplanatory noteThe amendments made by the table insert headings into rules that presently have none.

[3.11] Other minor amendments—italicsamendments in accordance with the following table


Rule 6.2.3 (2) (a) (ii) and (b) (ii)

QFC QFC

Glossary, definition of Regulatory Authority

QFC QFC

Explanatory noteThe amendments made by the table remove unnecessary italics.


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