CA-4.7.20
Shari'a-compliant hedging instruments which are normally traded OTC can be given a RW of 0% provided the conditions set out in the following are met. (In case these conditions are not fulfilled, see Paragraphs CA-4.5.10 and CA-4.5.11 for calculating the credit equivalent using the Current Exposure Method).
(a) The OTC Shari'a-compliant hedging instruments are subject to daily mark-to-market;
(b) There is no currency mismatch; and
(c) The collateral is cash. In case the collateral is not cash, but consists of Sukuk issued by sovereigns/PSE that qualify for a 0% RW in the standardised approach, a minimum RW of 10% applies.
January 2015