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  • CA-A CA-A Introduction

    • CA-A.1 CA-A.1 Purpose

      • Executive Summary

        • CA-A.1.1

          This Module lays down requirements that apply to all investment firm licensees, with respect to the minimum level of capital they must maintain. Category 1 investment firms are also required to make their own assessment of the appropriate level of capital that they need to hold.

          Amended: January 2007

        • CA-A.1.2

          Principle 9 of the Principles of Business requires that investment firm licensees maintain adequate human, financial and other resources, sufficient to run their business in an orderly manner (see Section PB-1.9). In addition, Condition 5 of the Central Bank of Bahrain's ('CBB') Licensing Conditions (Section AU-2.5) requires investment firm licensees to maintain financial resources in excess of the minimum requirements specified in Module CA (Capital Adequacy).

          Amended: January 2011
          Amended: January 2007

        • CA-A.1.3

          The requirements specified in this Module vary according to the category of investment firm licensee concerned, their inherent risk profile, and the volume and type of business undertaken. The purpose of such requirements is to ensure that investment firm licensees hold sufficient capital to provide some protection against unexpected losses, and otherwise allow investment firms to effect an orderly wind-down of their operations, without loss to their customers or those of other firms. The minimum capital requirements specified here are not sufficient to absorb all unexpected losses.

      • Legal Basis

        • CA-A.1.4

          This Module contains the CBB's Directive (as amended from time to time) relating to the capital adequacy of investment firm licensees, and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain Financial Institutions Law 2006 ('CBB Law'). The Directive in this Module is applicable to all investment firm licensees.

          Amended: January 2011
          Adopted: January 2007

        • CA-A.1.5

          For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

          Adopted: January 2007

    • CA-A.2 CA-A.2 Module History

      • Evolution of Module

        • CA-A.2.1

          This Module was first issued in April 2006 by the BMA, as part of the first phase of Volume 4 (Investment Business) to be released. It is dated April 2006. Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.

          Amended: July 2007

        • CA-A.2.2

          When the CBB replaced the BMA in September 2006, the provisions of this Module remained in force. Volume 4 was updated in July 2007 to reflect the switch to the CBB; however, new calendar quarter dates were only issued where the update necessitated changes to actual requirements.

          Adopted: July 2007

        • CA-A.2.3

          A list of recent changes made to this Module is provided below:

          Module Ref. Change Date Description of Changes
          CA-A.1 07/2007 New Rule CA-A.1.4 introduced, categorising this Module as a Directive.
          CA-1.1 07/2007 Minor change to notification period in Rule CA-1.1.4.
          CA-2.1.5 01/2008 Clarified the definition of Tier 1 capital re preference shares.
          CA-2.1.8 01/2008 Clarified definition of Tier 2 capital
          CA-B.1 10/2009 New Rules CA-B.1.4 and CA-B.1.3 introduced to clarify calculation of regulatory capital for overseas investment firm licensees.
          CA-1.1 10/2009 New Rule CA-1.1.4 introduced regarding CBB's requirements for maintaining capital in Bahrain.
          CA-1.2 and CA-2.1.5 10/2009 Amended terminology.
          CA-2.1.8 10/2009 Clarified definition of Tier 2 capital.
          CA-3.4 10/2009 Clarified definition of foreign exchange requirement.
          CA-A.1.4 01/2011 Clarified legal basis.
          CA-B.1 01/2011 New title given to this section.
          CA-1 01/2011 Restructured by moving Paragraphs in Section CA-B.1 and categorised capital adequacy requirements for different legal forms of investment firms (Bahraini and Overseas) and added new Rule on the booking of assets and liabilities.
          CA-1.1.5A 01/2011 Added Guidance on alternative to increase capital.
          CA-1.2.11 and CA-1.2.12 01/2011 Paragraphs relocated from Section CA-1.1.
          CA-2.1.8 01/2011 Added dated subordinated term debt with an original term of over 5 years to Tier 2 capital instruments.
          CA-1.2.9 and CA-1.2.9A 04/2011 Clarified notification requirements where investment firm licensees do not meet certain requirements.
          CA-3.1 04/2011 Provided new Rule to deal with newly established investment firm licensees.
          CA-A.2.3 01/2012 Corrected typo.
          CA-2.2.3 01/2012 Corrected cross reference.
          CA-1.2.9A 10/2012 Clarified Rule.
          CA-1.1.5A to CA-1.1.5C 01/2013 Updated Rules and Guidance dealing with issuance of subordinated debt.
          CA-2.2.2 01/2013 Corrected typo and added cross reference.
          CA-3.1.3 10/2013 Removed reference to appointed representatives.
          CA-4.1 10/2014 Added new guidance for capital for underwriting purposes.
          CA-1.1.7 and CA-1.1.8 07/2015 Guidance paragraphs deleted as reference is out of date.
          CA-1.1.5A and CA-2.1.14 01/2016 Corrected cross references.
          CA-2.1.3 01/2016 Clarified Rule on type of capital that can be used to satisfy the regulatory capital requirement.
          CA-2.1.8 01/2016 Corrected numbering of Subparagraphs.
          CA-1.1.1 10/2019 Amended Paragraph on the obligation to maintain adequate capital.
          CA-1.1.4 10/2019 Amended Paragraph on minimum capital requirement.
          CA-2.1.3 10/2019 Amended Paragraph on eligible components.
          CA-3.2.1 10/2019 Added new PRR in Schedule 1 for claims on sovereigns, PSEs, International Organisations and MDBs.
          CA-3.2.2 10/2019 Added a new Paragraph on PRR for claims on sovereigns to governments and central banks.
          CA-3.2.3 10/2019 Added a new Paragraph on PRR for Bahraini PSEs, International Organisations and MDBs.
          CA-1.2.7 04/2023 Amended minimum capital requirement for Category 3 Investment firms.
          CA-1.2.7A 04/2023 Added a new Paragraph on minimum liquid funds required to be maintained by Category 3 investment firms.

      • Superseded Requirements

        • CA-A.2.4

          This Module supersedes the following provisions contained in circulars or other regulatory instruments:

          Circular/other reference Provision Subject
          Standard Conditions and Licensing Criteria: investment advisers/brokers. Article 1 Capital Funds
          Standard Conditions and Licensing Criteria: broking company Article 1 Minimum Capital
          Standard Conditions and Licensing Criteria: stockbrokerage Article 1 Minimum Capital

        • CA-A.2.5

          Guidance on the implementation and transition to Volume 4 (Investment Business) is given in Module ES (Executive Summary).