Prudential — Investment, Insurance Intermediation and Banking (PIB)chapter by chapter

App1 Categorisation DiagramApp1-App11 - Detailed Methodology and Guidance — App1 Categorisation Diagram

Use the App1 categorization diagram as a guide for determining prudential categories.

App2 (A2.1-A2.5)App1-App11 - Detailed Methodology and Guidance — App2 (A2.1-A2.5)

Firms must apply the detailed trading book inclusion and trading-intent criteria, trading book policy requirements, risk management controls, regulatory return reporting specifications, and prudent valuation practices set out in Appendix 2.

App3 (A3.1)App1-App11 - Detailed Methodology and Guidance — App3 (A3.1)

Firms must apply the App3 guidance on the nature, type and frequency of stress and scenario testing supporting the capital adequacy assessment under Chapter 3.

App4 (A4.1-A4.12)App1-App11 - Detailed Methodology and Guidance — App4 (A4.1-A4.12)

Firms must apply detailed credit risk controls, CCF tables, collateral haircuts, SA-CCR, securitisation, concentration risk and Simplified Approach for Category 2 firms, per Appendix 4 guidance.

App5 (A5.1-A5.10)App1-App11 - Detailed Methodology and Guidance — App5 (A5.1-A5.10)

DFSA-authorised firms must apply the Market Risk systems-and-controls guidance and standardised calculation methods for interest rate, equity, FX, commodity, option and CVA risks, plus internal model approval criteria.

App6 (A6.1)App1-App11 - Detailed Methodology and Guidance — App6 (A6.1)

Firms must calculate operational risk capital requirement using the Basic Indicator, Standardised, or Alternative Standardised Approach, following prescribed formulae and business-line gross income mappings.

App9 (A9.1-A9.4)App1-App11 - Detailed Methodology and Guidance — App9 (A9.1-A9.4)

Branches must apply for a global liquidity concession and follow detailed methodologies for LCR, maturity mismatch, and NSFR as outlined in Appendix 9.

App10 (A10.1-A10.3)App1-App11 - Detailed Methodology and Guidance — App10 (A10.1-A10.3)

Those performing Chapter 10 assessments must have due and appropriate regard to App10 guidance on establishing and conducting IRAP and ICAAP and the DFSA's SREP evaluation methodology.

App11 (Detailed Public Disclosure Content)App1-App11 - Detailed Methodology and Guidance — App11 (Detailed Public Disclosure Content)

Firms must make the detailed public disclosures prescribed in App11, covering capital composition, capital adequacy and leverage, liquidity risk LCR and NSFR, and Table 15 indicators where applicable.

Rule 2.5.12 - General Requirements — Rule 2.5.1

Authorised Firms in Categories 1, 2 (other than Matched Principal) or 5 must maintain a Governing Body-approved risk appetite statement setting aggregate risk limits, communicated to staff and reviewed regularly.

Rule 3.2.43 - Capital — Rule 3.2.4

A DFSA Branch must hold adequate liquid assets, meet Home State prudential requirements, and immediately notify the DFSA of any actual or anticipated prudential breach.

Rule 3.2.63 - Capital — Rule 3.2.6

Authorised Firms in Categories 3A to 4 must immediately notify the DFSA and confirm in writing if Capital Resources fall below 120% of the Capital Requirement.

Rule 5.2.15 - Market Risk — Rule 5.2.1

Regulated firms must implement and maintain a documented market risk policy covering risk appetite and management approach, supported by risk systems, and review it at appropriate intervals.

Rule 5.115 - Market Risk — Rule 5.11

Firms must obtain prior written DFSA approval before using an internal model for any market risk capital requirement component, and prior written DFSA consent before reverting to the standardised methodology.

Rule 8.1.28 - Group Risk — Rule 8.1.2

Where the DFSA directs, a firm must form or join a Financial Group with a Group entity deemed necessary for effective supervision, and provide the DFSA information on Group structure and Group Risk controls on request.

Rules 1.1.1-1.1.21 - Application, Interpretation and Categorisation — Rules 1.1.1-1.1.2

PIB rules apply to all Authorised Firms except Insurers, Representative Offices and Credit Rating Agencies, covering the whole business, and Branches must follow the chapter-by-chapter application in Table A.

Rules 1.3.1-1.3.7A1 - Application, Interpretation and Categorisation — Rules 1.3.1-1.3.7A

Firms must determine their prudential category (1 to 5, including 3A to 3D) based on authorised Financial Services, at authorisation and whenever those services change.

Rules 1.4.1-1.4.41 - Application, Interpretation and Categorisation — Rules 1.4.1-1.4.4

Systemically Important Banks must adhere to additional supervisory measures and higher capital requirements as designated by the DFSA.

Rules 2.2.1-2.2.32 - General Requirements — Rules 2.2.1-2.2.3

Maintain a Trading Book for large trading positions and differentiate it from Non-Trading Book activities, adhering to specific size thresholds.

Rules 2.3.1-2.3.82 - General Requirements — Rules 2.3.1-2.3.8

Regulatory Returns must be submitted via the DFSA system with signed Form B100, retaining copies for 6 years and correcting inaccuracies promptly.

Rules 3.2.2-3.2.3, 3.2.5-3.2.73 - Capital — Rules 3.2.2-3.2.3, 3.2.5-3.2.7

Domestic Firms must keep capital resources above the capital requirement plus adequate additional capital, maintain capital adequacy controls and scenario analysis, notify the DFSA immediately of breaches, and meet CET1/T1 ratios.

Rules 4.3.1-4.3.44 - Credit Risk — Rules 4.3.1-4.3.4

Authorized Firms must maintain comprehensive Credit Risk management systems, with the Governing Body overseeing and reviewing credit activities regularly.

Rules 4.4.1-4.4.84 - Credit Risk — Rules 4.4.1-4.4.8

Banks must maintain a documented, governing-body-approved credit risk strategy and policy reviewed annually, plus a credit procedures manual covering lending limits, conflicts and related person lending.

Rules 4.5.1-4.5.94 - Credit Risk — Rules 4.5.1-4.5.9

Banks must maintain an internal credit grading system, classify credits and non-performing exposures, apply minimum provisioning rates, prohibit evergreening, and review problem exposures monthly.

Rules 6.2.1-6.2.26 - Operational Risk — Rules 6.2.1-6.2.2

Firms must maintain a documented operational risk policy covering identification, assessment, control and monitoring, approved by the governing body and reviewed at appropriate intervals.

Rules 6.6.1, 6.8.1, 6.9.16 - Operational Risk — Rules 6.6.1, 6.8.1, 6.9.1

Firms must maintain IT policies, information security controls and technology risk management, manage outsourcing risks, and keep business continuity and disaster recovery arrangements.

Rules 6.13.7-6.13.8 (Fraud and Money Transmission reporting)6 - Operational Risk — Rules 6.13.7-6.13.8 (Fraud and Money Transmission reporting)

Firms must give the DFSA quarterly fraud statistics, including fraud rates and transaction values, and Money Transmission firms must also report quarterly transfer details.

Rules 8.2.1-8.2.28 - Group Risk — Rules 8.2.1-8.2.2

Groups must establish controls to monitor relationships, compliance, and capital adequacy within the Group.

Rules 9.2.1-9.2.29 - Liquidity Risk — Rules 9.2.1-9.2.2

Licensed firms must maintain a written liquidity risk policy approved at least annually by the Governing Body, which bears ultimate responsibility for liquidity risk.

Rules 9.3.11-9.3.13 (Maturity Mismatch and NSFR)9 - Liquidity Risk — Rules 9.3.11-9.3.13 (Maturity Mismatch and NSFR)

Category 1 or 5 firms must calculate cumulative maturity mismatch positions separately for PSIAu and deposit funding, keep the sight-8-day position within limits, maintain NSFR of at least 100%, and notify the DFSA of breaches.

Rules 11.1.1-11.1.311 - Disclosure Requirements — Rules 11.1.1-11.1.3

Authorised Firms in specified categories must make public disclosures at the Financial Group level unless exempted, with additional disclosure requirements for significant firms.

Rules 11.2.1-11.2.311 - Disclosure Requirements — Rules 11.2.1-11.2.3

Firms must adopt and maintain a written disclosure policy approved by the Governing Body, covering disclosure scope, internal controls and medium, with verification of accuracy and timeliness.

Rules 11.3.1-11.3.311 - Disclosure Requirements — Rules 11.3.1-11.3.3

Authorised firms must make annual disclosures, with quarterly capital and liquidity ratio disclosures, in annual reports or approved referenced locations, omitting only immaterial, proprietary or confidential items with stated reasons.

Section 2.4 and App2 A2.52 - General Requirements — Section 2.4 and App2 A2.5

Prudent valuation practices must be applied to fair-valued positions, ensuring adequate systems and controls are established in line with DFSA expectations.

Section 3.6 (Base Capital Requirement)3 - Capital — Section 3.6 (Base Capital Requirement)

Firms must hold Common Equity Tier 1 capital at or above the base capital requirement for their category, at authorisation and continuously thereafter, ranging from US$10 million to US$30,000-140,000.

Section 3.7 (Expenditure Based Capital Minimum)3 - Capital — Section 3.7 (Expenditure Based Capital Minimum)

Eligible firms must calculate their Expenditure Based Capital Minimum from audited expenditure times the applicable ratio, and submit recalculations to the DFSA within seven days.

Section 3.18 (Leverage Ratio)3 - Capital — Section 3.18 (Leverage Ratio)

Authorized Firms must calculate and maintain a minimum Leverage Ratio of 3% and notify the DFSA of any shortfalls immediately.

Section 4.13 (Credit Risk Mitigation)4 - Credit Risk — Section 4.13 (Credit Risk Mitigation)

Institutions may apply credit risk mitigation only when prescribed recognition conditions are met, and must document policies on maturity mismatch and perform periodic CRM stress testing.

Section 4.14 (Securitisation)4 - Credit Risk — Section 4.14 (Securitisation)

Apply prescribed risk-transference conditions to traditional and synthetic securitisations, calculate securitisation exposure RWA by prescribed formulae, and cap aggregate RWA at on-balance-sheet level.

Section 4.14A (Counterparty Credit Risk)4 - Credit Risk — Section 4.14A (Counterparty Credit Risk)

Counterparty credit risk exposure for derivatives and securities financing transactions must be calculated using the SA-CCR standardised approach, including exposures to central counterparties.

Section 4.15 (Large Exposures/Concentration Risk)4 - Credit Risk — Section 4.15 (Large Exposures/Concentration Risk)

Firms must monitor exposures to counterparty groups daily, stay within the 25% of Tier 1 large exposure limit and 800% aggregate limit, and notify the DFSA immediately of breaches.

Section 6.106 - Operational Risk — Section 6.10

Firms engaging in trading must ensure proper authority, duty segregation, documented trading terms, regular audits, and escalation for unusual transactions.

Section 6.11 (Operational Risk Capital Requirement)6 - Operational Risk — Section 6.11 (Operational Risk Capital Requirement)

Operational Risk Capital Requirement must be calculated using the Basic Indicator Approach unless DFSA approves another approach; reverting requires prior written DFSA approval.

Section 6.12 (Professional Indemnity Insurance)6 - Operational Risk — Section 6.12 (Professional Indemnity Insurance)

Authorised Firms in Category 3B or 4 must maintain professional indemnity insurance with prescribed minimum limits, provide annual 12-month forward cover confirmation to the DFSA, and notify material changes.

Section 7.57 - Interest Rate Risk in the Non-Trading Book — Section 7.5

Firms must maintain a documented non-trading book interest rate risk policy, approved and monitored by the governing body, assess new products' rate impact before launch, and review the policy periodically.

Section 8.58 - Group Risk — Section 8.5

Category 1 or 5 Authorised Firms must have Category 1/5 or deposit-taking regulated parents; Category 2 to 4 firms may not parent them unless themselves subsidiaries of qualifying regulated parents.

Section 9.2A (Funding strategy, stress testing and contingency funding plan)9 - Liquidity Risk — Section 9.2A (Funding strategy, stress testing and contingency funding plan)

Liquidity risk rules require institutions to assess funding profiles and currency mismatches, set Governing Body-approved liquidity limits, run stress tests, and maintain a documented contingency funding plan.

Section 9.3 (HQLA and Liquidity Coverage Ratio)9 - Liquidity Risk — Section 9.3 (HQLA and Liquidity Coverage Ratio)

Firms must hold sufficient High Quality Liquid Assets to cover a 30-day severe stress scenario, maintain a Liquidity Coverage Ratio of at least 100%, and notify the DFSA immediately if this may not be met.

Section 10.3 (IRAP)10 - Supervisory Review and Evaluation Processes — Section 10.3 (IRAP)

Firms must maintain an Internal Risk Assessment Process, conducted at least annually and on material change, with Governing Body approval, DFSA submission deadlines, documented content, and records retained six years.

Section 10.4 (ICAAP)10 - Supervisory Review and Evaluation Processes — Section 10.4 (ICAAP)

Firms must maintain an Internal Capital Adequacy Assessment Process (ICAAP) to ensure adequate capital against risk, reviewed annually and after material change, with records kept six years.

Section 10.5 (SREP) and Rules 10.6.1-10.6.210 - Supervisory Review and Evaluation Processes — Section 10.5 (SREP) and Rules 10.6.1-10.6.2

Firms must cooperate openly with the DFSA during SREP reviews of capital assessments, and maintain the Capital Resources specified in any Individual Capital Requirement notice.

Sections 3.8-3.8C (Risk, Stored Value, Transaction Based and Activity Based Capital Requirements)3 - Capital — Sections 3.8-3.8C (Risk, Stored Value, Transaction Based and Activity Based Capital Requirements)

Calculate applicable PIB capital requirements: risk capital at 10% of risk-weighted assets, stored value at 3% of average daily outstanding balance, tiered transaction-based for payment providers, and activity-based monthly.

Sections 3.9-3.9C (Capital Buffers)3 - Capital — Sections 3.9-3.9C (Capital Buffers)

Authorised firms must maintain a 2.5% capital conservation buffer, countercyclical and HLA buffers where applicable, and upon shortfall calculate maximum distributable amounts, notify the DFSA and submit a capital conservation plan within five business days.

Sections 3.11-3.17 (Calculation of Capital Resources)3 - Capital — Sections 3.11-3.17 (Calculation of Capital Resources)

Calculate Common Equity Tier 1, Additional Tier 1, and Tier 2 Capital by applying specific eligibility criteria and regulatory adjustments.

Sections 4.6-4.9 (CRCOM Calculation)4 - Credit Risk — Sections 4.6-4.9 (CRCOM Calculation)

Credit Risk Capital Requirement (CRCOM) must equal 8% of Credit RWA, covering credit, securitisation, counterparty credit and settlement risk exposures, using prescribed risk-weighting methodology.

Sections 5.4-5.10A (Market Risk Capital Requirement components)5 - Market Risk — Sections 5.4-5.10A (Market Risk Capital Requirement components)

Firms must calculate market risk capital components for interest rate, equity, foreign exchange, commodities, option, fund, underwriting and credit valuation adjustment risk, using approved internal models or standardised methodology.

Sections 6.3-6.46 - Operational Risk — Sections 6.3-6.4

Identify and assess operational risk in products and processes, track related events, and notify the DFSA of significant operational risks.

Sections 6.13.2-6.13.6 (Strong Customer Authentication and fraud controls)6 - Operational Risk — Sections 6.13.2-6.13.6 (Strong Customer Authentication and fraud controls)

Money Services, account information, and payment initiation providers must apply two-element strong customer authentication to online access and payments, and monitor transactions for fraud.

Sections 7.2-7.3 (SA-IRRBB)7 - Interest Rate Risk in the Non-Trading Book — Sections 7.2-7.3 (SA-IRRBB)

Institutions must evaluate non-trading book interest rate risk per material currency using the SA-IRRBB method or an approved internal system, keeping written records for six years.

Sections 8.3-8.48 - Group Risk — Sections 8.3-8.4

Calculate and ensure Financial Group Capital Resources meet the Financial Group Capital Requirement and manage large exposure limits.