• Market Risk

    • Full Recourse Istisna'a

      • (a)Istisna'a with Parallel Istisna'a

        • CA-3.4.23

          There is no capital charge for market risk to be applied in addition to provisions in paragraphs CA-3.4.14 to CA-3.4.22 above, subject to there being no provisions in the Parallel Istisna'a contract that allow the seller to increase or vary its selling price to the bank, under unusual circumstances. Any variations in a Parallel Istisna'a contract that are reflected in the corresponding Istisna'a contract which effectively transfers the whole of the price risk to an Istisna'a customer (buyer), is also eligible for this treatment.

          Apr 08

        • CA-3.4.24

          However, if the seller is allowed to vary the selling price of the asset, then under the price risk will be calculated in accordance with paragraph CA-5.2.2 of chapter CA-5.

          Apr 08

      • (b)Istisna'a without Parallel Istisna'a

        • CA-3.4.25

          A capital charge of 1.6% (equivalent to a 20% RW) is to be applied to the balance of unbilled WIP inventory to cater for market risk, in addition to the credit RW stated in paragraphs CA-3.4.14 to CA-3.4.22 above.

          Apr 08

        • CA-3.4.26

          This inventory is held subject to the binding order of the Istisna'a buyer and is exposed to the price risk as described in CA-3.4.11.

          Apr 08

    • Foreign Exchange Risk

      • CA-3.4.27

        Any foreign exchange exposures arising from the purchasing of input materials, or from Parallel Istisna'a contracts made, or the selling of a completed asset in foreign currency should be included in the measures of foreign exchange risk described in section CA-5.5.

        Apr 08