CA-5.2 CA-5.2 De Minimis exemptions
CA-5.2.1
A bank doing negligible business in foreign currencies and which does not take foreign exchange positions for its own account may, at the discretion of the Central Bank and as evidenced by the Central Bank's prior written approval, be exempted from calculating the capital requirements on these positions. The Central Bank is likely to be guided by the following criteria in deciding to grant exemption to any bank:
(a) The bank's holdings or taking of positions in foreign currencies, including gold, defined as the greater of the sum of the gross asset positions and the sum of the gross liability position in all foreign positions and gold, does not exceed 100% of its eligible capital; and(b) The bank's overall net open position, as defined in Section CA-5.3, does not exceed 2% of its eligible capital.October 07CA-5.2.2
The criteria listed in Paragraph CA-5.2.1 above are only intended to be guidelines, and a bank will not automatically qualify for exemptions upon meeting them. Banks doing negligible foreign currency business, which do not take foreign exchange positions for the bank's own account, and wish to seek exemption from foreign exchange risk capital requirements, should submit an application to the Central Bank, in writing. The Central Bank will have the discretion to grant such exemptions. The Central Bank may also, at its discretion, fix a minimum capital requirement for a bank that is exempted from calculating its foreign exchange risk capital requirement, to cover the risks inherent in its foreign currency business.
October 07CA-5.2.3
The Central Bank may, at a future date, revoke an exemption granted to a bank, if the Central Bank is convinced that the conditions on which the exemption was granted no longer exist.
October 07
