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Legal Framework

8.57. Market risk Capital charges for Islamic financial contracts

LEGAL ENTITIES LEGISLATION

FINANCIAL SERVICES LEGISLATION

REGULATIONS

RULES

GENERAL RULES

CONDUCT OF BUSINESS RULES

ANTI-MONEY LAUNDERING AND COUNTER-TERRORIST FINANCING AND SANCTIONS RULES

COLLECTIVE INVESTMENT SCHEME RULES

AUTHORISED MARKET INSTITUTION RULES

MARKET RULES

RECOGNITION RULES

DEMATERIALISED INVESTMENT RULES

RULES FOR PRE-IPO LISTINGS

SOVEREIGN BONDS RULES

BANKING BUSINESS PRUDENTIAL RULES

PRUDENTIAL RULES FOR INVESTMENT FIRMS

PRUDENTIAL RULES FOR INSURANCE INTERMEDIARIES

INSURANCE AND REINSURANCE PRUDENTIAL RULES

ISLAMIC BANKING BUSINESS PRUDENTIAL RULES

1. GENERAL

2. PRINCIPLES RELATING TO AN ISLAMIC BANK

3. PRUDENTIAL REPORTING REQUIREMENTS

4. CAPITAL ADEQUACY

5. CAPITAL BUFFERS AND OTHER REQUIREMENTS

6. CREDIT RISK

7. CONCENTRATION RISK AND LARGE EXPOSURES

8. MARKET RISK

8.1. General

8.2. Role of governing body—market risk

8.3. Relation to stress-testing

8.4. Requirements—Capital and management of market risk

8.5. Trading Book

8.6. No switching of instruments between books

8.7. Market Risk Management Policy

8.8. Trading Book Policies

8.9. Measurement of market risk - Standard method

8.10. Valuing positions—mark-to-market

8.11. Valuing positions—mark-to-model

8.12. Independent price verification

8.13. Valuation adjustments

8.14. Foreign exchange risk

8.15. What to include in foreign exchange risk

8.16. Foreign exchange risk on consolidated basis

8.17. Capital charge—foreign exchange risk

8.18. Valuing positions—binding unilateral promises

8.19. Options risk

8.20. Measuring options risk

8.21. Using simplified approach

8.22. Capital charges—‘long cash and long put’ or ‘short cash and long call’

8.23. Capital charges—‘long put’ or ‘long call’

8.24. Using delta-plus method

8.25. Relation to mark-to-market method

8.26. Capital charges—options

8.27. Gamma Capital charges

8.28. Vega Capital charges

8.29. Commodities risk and inventory risk

8.30. Measuring commodities risk

8.31. Measuring net positions

8.32. What to include in commodities risk

8.33. Assigning notional positions to maturities

8.34. Capital charges—simplified approach

8.35. Relation to market risk

8.36. Measuring inventory risk

8.37. Equity position risk

8.38. Measuring equity position risk

8.39. What to include in equity position risk

8.40. Charges for specific and general risks

8.41. Offsetting positions

8.42. Charges for index contracts

8.43. Profit rate risk in the trading book

8.44. What to include in profit rate risk

8.45. Capital charge—profit rate risk

8.46. Calculating specific risk Capital charge

8.47. Instruments that have no specific risk Capital charge

8.48. Measuring general risk

8.49. Maturity method

8.50. Steps in calculating general risk Capital charge

8.51. Positions in currencies

8.52. Binding unilateral promises

8.53. Swaps

8.54. Shari’ah-compliant hedging instruments

8.55. Criteria for matching Shari’ah-compliant hedging instrument positions

8.56. Criteria for offsetting Shari’ah-compliant hedging instrument positions

8.57. Market risk Capital charges for Islamic financial contracts

8.58. Treatment of murabahah and related contracts

8.59. Treatment of bai bithaman ajil

8.60. Treatment of salam and related contracts

8.61. Treatment of istisna without parallel istisna

8.62. Treatment of istisna with parallel istisna

8.63. Treatment of ijarah and related contracts

8.64. Treatment of diminishing musharakah

8.65. Treatment of mudarabah

8.66. Treatment of qardh

8.67. Treatment of wakalah

9. OPERATIONAL RISK

10. LIQUIDITY RISK

11. GROUP RISK

12. TREATMENT OF SUKUK

13. TREATMENT OF PSIAS AND ASSOCIATED RISKS

14. SUPERVISORY REVIEW AND EVALUATION PROCESS

15. PUBLIC DISCLOSURE REQUIREMENTS

APPENDIX 1: LIQUIDITY RISK

APPENDIX 2: GROUP RISK

APPENDIX 3: SUPERVISORY REVIEW AND EVALUATION PROCESS

APPENDIX 4: PUBLIC DISCLOSURES REQUIREMENTS

14. GLOSSARY

ISLAMIC FINANCE RULES

TAKAFUL AND RETAKAFUL PRUDENTIAL RULES

REPRESENTATIVE OFFICE RULES

AIFC AUDITOR RULES

AIFC Financial Technology Rules

COOPERATION AND EXCHANGE OF INFORMATION RULES

TERMS AND PROCEDURE FOR CURRENCY TRANSACTIONS

FINANCIAL SERVICES EXEMPT FROM CORPORATE TAX

GLOSSARY

FEES RULES

RULES ON CURRENCY REGULATION AND PROVISION OF INFORMATION ON CURRENCY TRANSACTIONS IN THE AIFC

RULES ON THE SUBSTANTIAL PRESENCE OF THE AIFC PARTICIPANTS APPLYING TAX EXEMPTIONS FOR THE PAYMENT OF CIT, VAT

MULTILATERAL AND ORGANISED TRADING FACILITIES RULES

AIFC RECOVERY AND RESOLUTION RULES

AIFC RULES ON DIGITAL ASSET ACTIVITIES

RULES AND MECHANISMS OF COOPERATION OF UNBACKED DIGITAL ASSET EXCHANGES AND/OR CENTRE PARTICIPANTS AUTHORIZED TO CARRY OUT DIGITAL ASSETS-RELATED ACTIVITIES WITH SECOND-TIER BANK OF THE REPUBLIC OF KAZAKHSTAN

AIFC RULES ON PROVIDING MONEY SERVICES

POLICIES AND POLICY STATEMENTS

8.57. Market risk Capital charges for Islamic financial contracts

This section describes and sets out the market risk Capital charges applicable to the main types of Islamic Financial Contracts typically employed by Islamic Banks across the world.

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8.57. Market risk Capital charges for Islamic financial contracts

This section describes and sets out the market risk Capital charges applicable to the main types of Islamic Financial Contracts typically employed by Islamic Banks across the world.