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  • LM-1.2 LM-1.2 Stock Liquidity Ratio

    • LM-1.2.1

      Licensees must maintain a minimum stock liquidity ratio of 25% on a monthly basis. Such ratio is to be calculated for Bahrain operations only.

      Amended: July 2014
      January 2014

    • LM-1.2.2

      The CBB may require licensees to maintain an average stock liquidity ratio in excess of the 25% minimum required under Paragraph LM-1.2.1, should it have concerns regarding the licensee's liquidity and/or financial position.

      January 2014

    • LM-1.2.3

      The stock liquidity ratio, expressed as a percentage, must be calculated on each business day and is the ratio of the sum of the licensee's liquid assets, net of deductions required under Paragraph LM-1.2.6, divided by the sum of qualifying liabilities.

      January 2014

    • LM-1.2.4

      The average stock liquidity ratio for a calendar month is calculated by dividing the sum of the daily stock liquidity ratio calculated in accordance with Paragraph LM-1.2.3 at the close of business on each working day during a month by the number of business days during that month.

      January 2014

    • Liquid Assets

      • LM-1.2.5

        For purposes of Paragraph LM-1.2.3, liquid assets are defined as:

        (a) Cash and unencumbered current accounts with financial institutions;
        (b) Placements with financial institutions maturing within one month;
        (c) Exchange traded financial instruments;
        (d) GCC government securities;
        (e) Other sovereign bonds and bills up to one year maturity, carrying a minimum rating of AA-; and
        (f) Accounts receivable due within one month.
        January 2014

      • LM-1.2.6

        The liquid assets noted under Paragraph LM-1.2.5 must also meet the following requirements to be included in the calculation of the stock liquidity ratio. They must be:

        (a) Free from encumbrances; and
        (b) Freely available and payable.
        January 2014

    • Qualifying Liabilities

      • LM-1.2.7

        For purposes of Paragraph LM-1.2.3, qualifying liabilities are defined as:

        (a) Liabilities due within one month; and
        (b) Irrevocable commitments to provide funds within one month.
        January 2014

      • LM-1.2.8

        For purposes of Subparagraph LM-1.2.7 (b), irrevocable commitments include facilities:

        (a) With a known date of drawdown within one month; and
        (b) Without a known date of drawdown but carrying a notice period of within one month (including where the drawdown is on demand, i.e. requiring no notice period) except where conditions attached to the drawdown cannot be met in practice within one month.
        January 2014

      • LM-1.2.9

        Potential commitments relating to credit card facilities, which may be cancelled at any time are excluded from qualifying liabilities.

        January 2014