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  • Summary of Capital Requirements for Wakalah Categories

    • CA-3.10.21

      The following table sets out the Wakalah categories that attract capital charges.

      Wakalah Category Credit RW Market Risk Capital Charge
      Wakalah investments to undertake trading activities in foreign exchange, shares and/ or commodities, including CMT Not applicable Depends on the underlying asset as set out in the applicable market risk section.

      See Section CA-5.5 for Wakalah investments in FX.

      See Section CA-5.3 for Wakalah Investments in shares.

      See Section CA-5.6 for Wakalah Investments in commodities.

      See Section CA-3.11 for Wakalah investments in CMT.
      Wakalah investments with private commercial enterprise to undertake business activities, other than above categories
      (a) Simple risk-weight method 300–400% RW of the placed amount less any specific provisions

      Or:
      (b) Slotting method Between 90% and 270% RW of the contributed amount to the business venture based on the four categories
      		Not applicable
      Wakalah placement in the interbank market Risk-weighting can be applied based on the credit standing of the counterparty* as rated by the approved ECAI, or a RW of 100% for an unrated counterparty. Not applicable**

      * In the case of a third-party guarantee, the capital must be treated as subject to credit risk with a risk weighting equal to that of the guarantor provided that the RW of that guarantor is lower than the RW of the Wakil as counterparty. Otherwise, the RW of the Wakil applies.

      ** If funds are invested in foreign exchange, foreign exchange risk will also be applicable as per Section CA-5.5.

      January 2015