CA-15.3.21

A Bahraini conventional bank licensee acting as agent in a SFT generally provides an indemnity or guarantee to only one of the two parties involved, and only for the difference between the value of the security or cash its customer has lent and the value of collateral the borrower has provided. In this situation, the bank is exposed to the counterparty of its customer for the difference in values rather than to the full exposure to the underlying security or cash of the transaction (as is the case where the bank is one of the principals in the transaction).

CA-15.3.22

Where a Bahraini conventional bank licensee acting as agent in a SFT provides an indemnity or guarantee to a customer or counterparty for any difference between the value of the security or cash the customer has lent and the value of collateral the borrower has provided, then the Bahraini conventional bank licensee will be required to calculate its exposure measure by applying only Subparagraph 15.3.19(b).²⁶

²⁶ Where, in addition to the conditions in Paragraphs CA-15.3.21 to 15.3.23, a bank acting as an agent in a SFT does not provide an indemnity or guarantee to any of the involved parties, the bank is not exposed to the SFT and therefore need not recognise those SFTs in its exposure measure.

CA-15.3.23

A Bahraini conventional bank licensee acting as agent in a SFT and providing an indemnity or guarantee to a customer or counterparty will be considered eligible for the exceptional treatment set out in paragraph CA-15.3.22 only if the Bahraini conventional bank licensee's exposure to the transaction is limited to the guaranteed difference between the value of the security or cash its customer has lent and the value of the collateral the borrower has provided. In situations where the Bahraini conventional bank licensees is further economically exposed (i.e. beyond the guarantee for the difference) to the underlying security or cash in the transaction,²⁷ a further exposure equal to the full amount of the security or cash must be included in the exposure measure.

²⁷ For example, due to the bank managing collateral received in the bank's name or on its own account rather than on the customer's or borrower's account (e.g. by on-lending or managing unsegregated collateral, cash or securities).