Wakalah Investments to Undertake Trading Activities in Foreign Exchange, Shares and/or Commodities, including CMT
CA-3.10.11
The RW is based on the applicable underlying assets as set out in the
market risk section in Chapter CA-5. An investment in foreign exchange and trading in gold or silver must be measured according to the treatment as set out in Section CA-5.5, which requires an 8% capital charge on the greater of either net long or net short positions and an 8% capital charge on the net position of gold/silver.January 2015CA-3.10.12
The RW of a Wakalah for funds that are invested in quoted shares must be measured according to the equity position risk approach, where positions in assets tradable in markets qualify for treatment as equity position risk in the trading book, which incur a total capital charge of 16% (equivalent to 200% RW) as set out in Section CA-5.3.
January 2015CA-3.10.13
Investment in commodities must be measured according to either the maturity ladder approach or the simplified approach as set out in Section CA-5.6.
January 2015CA-3.10.14
If the Wakalah investment is to be utilised by the Wakil (another
Islamic bank licensee ) for conducting CMT to earn a (fixed rate of) profit, the investingIslamic bank licensee is primarily exposed to the counterparty risk. In that case, the invested amount (net of specific provisions) must be assigned a RW based on the credit standing of the counterparty as rated by an approved ECAI. In cases where the counterparty is unrated, a RW of 100% applies (see Section CA-4.2).January 2015
