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  • Structural positions

    • CA-6.3.6

      Positions of a structural, i.e. non-dealing, nature as set out below, may be excluded from the calculation of the net open currency positions:

      (a) Positions are taken deliberately in order to hedge, partially or totally, against the adverse effects of exchange rate movements on the bank's capital adequacy ratio;
      (b) Positions related to items that are deducted from the bank's capital when calculating its capital base in accordance with the rules and guidelines in this Module, such as investments in non-consolidated subsidiaries; and
      (c) Retained profits held for payout to parent.

      The Central Bank will consider approving the exclusion of the above positions for the purpose of calculating the capital requirement, only if the following conditions are met:

      (i) The concerned bank provides adequate documentary evidence to the Central Bank which establishes the fact that the positions proposed to be excluded are, indeed, of a structural, i.e. non-dealing, nature and are merely intended to protect the bank's capital adequacy ratio. For this purpose, the Central Bank may ask for written representations from the bank's management or Directors; and
      (ii) Any exclusion of a position is consistently applied, with the treatment of the hedge remaining the same for the life of the associated assets or other items.
      October 07