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  • ES-1.8 ES-1.8 Module CA (Capital Adequacy)

    • ES-1.8.1

      Module CA contains requirements on the minimum levels of capital that must be held by investment firm licensees, as well as what constitutes capital for regulatory purposes. These requirements are tailored to fit the different risk profiles of the different categories of investment firm licensees. The requirements apply to both Bahraini investment firm licensees and overseas investment firm licensees (see Section CA-B.1)

      Amended: January 2007

    • ES-1.8.2

      Investment firm licensees are required to maintain their regulatory capital in excess of their regulatory capital requirements at all times. For Category 1 and 2 firms, their regulatory capital requirement is the higher of their Minimum Capital Requirement and their Risk-based Capital Requirement. For Category 3 firms, their regulatory capital requirement is simply their Minimum Capital Requirement.

      Amended: October 2009

    • ES-1.8.3

      Minimum Capital Requirements are as follows:

      (a) Category 1 investment firms: BD 1,000,000
      (b) Category 2 investment firms: BD 1,000,000 if undertaking the activity of safeguarding financial instruments (i.e. custodian), BD 250,000 in all other cases; and
      (c) Category 3 investment firms: BD 125,000.
      Amended: October 2009
      July 2007

    • ES-1.8.4

      Risk-based Capital Requirements comprise the sum of a firm's Expenditure Requirement, Position Risk Requirement, Counterparty Risk Requirement and Foreign Exchange Risk Requirement. The actual amount of capital that is required to be held varies depending on the size of an institution's cost base and its various exposures. In practice, the Risk Based Capital Requirement of Category 2 investment firms, because they are not allowed to deal in financial instruments as principal (and thus incur position risk), would largely be determined by its Expenditure Requirement (and any currency mismatches between its assets and liabilities).

      Amended: January 2007

    • ES-1.8.5

      In assessing the financial ability of a Category 1 investment firm licensee to underwrite transactions, the CBB will consider, amongst other factors, the licensee's capital adequacy, its capacity to undertake the activity, and its track record in complying with applicable regulatory requirements. Any underwriting activities require the prior approval of the CBB's Capital Market Supervision Directorate and are subject to Module OFS (Offering of Securities) of Volume 6 of the CBB Rulebook.

      Amended: October 2014
      Amended: January 2007