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Thus, capital charge for market risks in foreign exchange and gold open position is 9 per cent. These open positions, limits or actual whichever is higher, would continue to attract capital charge at 9 per cent. This capital charge is in addition to the capital charge for credit risk on the on-balance sheet and off-balance sheet items pertaining to foreign exchange and gold transactions.

These measures could also include the stipulation of a bank-specific minimum CRAR that could potentially be even higher, if so warranted by the facts and circumstances, than the regulatory minimum stipulated under the Pillar 1. In cases where the RBI decides to stipulate a CRAR at a level higher than the regulatory minimum, it would explain the rationale for doing so, to the bank concerned. However, such an add-on CRAR stipulation, though possible, is not expected to be an automatic or inevitable outcome of the SREP exercise, the prime objective being improvement in the risk management systems of the banks. I) A liquidity facility will be considered as an ‘eligible’ facility only if it satisfies all minimum requirements prescribed in the guidelines issued on February 1, 2006. The rated liquidity facilities will be risk weighted or deducted as per the appropriate risk weight determined in accordance with the specific rating assigned to those exposures by the chosen ECAIs as indicated in the tables presented above. At a minimum, banks must give the disclosures in this Table in relation to credit risk mitigation that has been recognised for the purposes of reducing capital requirements under this Framework.

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Fomo is measured as large percentage moves of the high price from the min over a look-back period. Panic is measured as large percentage moves of the low price from the max over a look-back period. In Binary Option or High Frequency Forex , it’s very common to see the market make reversals at hours and half hours. I have read and understood India’s comments guidelines and agree to the terms described. Some Companies give Dividends As regularly but Some companies never give dividends to shareholders. That’s why you need to find such companies which have a good record of giving dividends on regular basis to the shareholders.

If, for example, the time-bands 3 to 4 years, 4 to 5 years and 5 to 7 years are combined, the highest assumed change in yield of these three bands would be 0.75. The rules applying to closely-matched positions set out in paragraph 2 of this Appendix will also apply in this respect. Two-months call option on a bond future, where delivery of the bond takes place in September, would be considered in April as being long the bond and short a five-month deposit, both positions being delta-weighted.

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Furthermore, a bank cannot use the credit assessments issued by one external credit rating agency for one or more tranches and those of another external credit rating agency for other positions within the same securitisation structure that may or may not be rated by the first external credit rating agency. Where two or more eligible external credit rating agencies can be used and these assess the credit risk of the same securitisation exposure differently, paragraphs 6.7 will apply. 6.2.1 Banks should use the chosen credit rating agencies and their ratings consistently for each type of claim, for both risk weighting and risk management purposes. Banks will not be allowed to “cherry pick” the assessments provided by different credit rating agencies.

This requirement would also apply to the foreign banks which have a branch presence in India and their ICAAP should cover their Indian operations only. It is, therefore, only appropriate that the banks make their own assessment of their various risk exposures, through a well-defined internal process, and maintain an adequate capital cushion for such risks. 8.4.2 Capital charge for specific risk will be 9 per cent and specific risk is computed on the banks’ gross equity positions (i.e. the sum of all long equity positions and of all short equity positions – short equity position is, however, not allowed for banks in India). The general market risk charge will also be 9 per cent on the gross equity positions. Ii) In case of banks where capital adequacy norms are not applicable at present, the matter of investments in their capital-eligible instruments would not arise for now. However, column Nos. 2 and 4 of the Table above will become applicable to them, if in future they issue any capital instruments where other banks are eligible to invest.

  • Banks are required to adjust both the amount of the exposure to the counterparty and the value of any collateral received in support of that counterparty to take account of possible future fluctuations in the value of either, occasioned by market movements.
  • He also held that remarks by then chief operating officer Philip Chen Nanlok and current chief executive Tony Tyler after the sackings were defamatory.
  • These Stocks have continual demand for their business or products regardless of the performance of the share market.
  • No transaction in which Credit Risk Mitigation techniques are used should receive a higher capital requirement than an otherwise identical transaction where such techniques are not used.
  • They have a six-inch recline (two inches over the current long-haul economy seat).
  • While the use of CRM techniques reduces or transfers credit risk, it simultaneously may increase other risks .

In February 2019, the airline issued a profit alert to the Hong Kong Stock Exchange indicating a profit of HK$2.3 billion for the 2018 financial year, signalling early signs of success of its transformation. The airline has also invested significantly in other hard product and digital offerings such as an upgraded website, new or refurbished lounges across its network, including the first airline lounge yoga studio at The Pier – Business in Hong Kong. The airline restructured its organization to be more agile and faster in decision making as well as responding to customers’ needs. Under new leadership, the airline started to transform its business after suffering from 2 years of consecutive loss.

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Modified duration – which is standard duration divided by 1 + r, where r is the level of market interest rates – is an elasticity. As such, it reflects the percentage change in the economic value of the instrument for a given percentage change in 1 + r. As with simple duration, it assumes a linear relationship between percentage changes in value and percentage changes in interest rates. The second form of duration relaxes this assumption, as well as the assumption that the timing of payments is fixed.

Cathay Pacific’s head office, Cathay City, is located at Hong Kong International Airport. Cathay City was scheduled to be built in increments between April and September 1998. Previously the airline’s headquarters were at the Swire House, which was a complex in Central named after the airline’s parent company. In December 2020, the company said that it is expecting losses in the second half higher than the losses of the first half due to the low demand, restructuring charges and impairments on its fleet.

This Section outlines in somewhat greater detail the scope of the risk universe expected to be normally captured by the banks in their ICAAP. Supervisors should seek to intervene at an early stage to prevent capital from falling below the minimum levels. Include income derived from insurance activities (i.e. income derived by writing insurance policies) and insurance claims in favour of the bank. 9.2.2 Banks are encouraged to move along the spectrum of available approaches as they develop more sophisticated operational risk measurement systems and practices.

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Higher-tiered members are provided with increased travel benefits such as guaranteed Economy Class seat, additional baggage allowance, priority flight booking and airport lounge access. The Marco Polo Club membership is terminated after 12 months of inactivity or failure to meet minimum travel criteria as outlined in the membership guide and will be downgraded to Asia Miles member. That is after accounting offsets in accordance with the applicable accounting regime and without taking into account the effects of credit risk mitigation techniques, e.g. collateral and netting. In addition to the general qualitative disclosure requirement (paragraph 10.13), the approach for operational risk capital assessment for which the bank qualifies. Banks should have a formal disclosure policy approved by the Board of directors that addresses the bank’s approach for determining what disclosures it will make and the internal controls over the disclosure process.

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Further, in terms of the Pillar 2 requirements of the New Capital Adequacy Framework, banks are expected to operate at a level well above the minimum requirement. While the use of CRM techniques reduces or transfers credit risk, it simultaneously may increase other risks . Where these risks are not adequately controlled, Reserve Bank may impose additional capital charges or take other supervisory actions. The disclosure requirements prescribed inTable DF-6 (paragraph 10 – Market Discipline) must also be observed for banks to obtain capital relief in respect of any CRM techniques. 6.2.7 Cash credit exposures tend to be generally rolled over and also tend to be drawn on an average for a major portion of the sanctioned limits. Hence, even though a cash credit exposure may be sanctioned for period of one year or less, these exposures should be reckoned as long term exposures and accordingly the long term ratings accorded by the chosen credit rating agencies will be relevant.

Reserve Bank has issued guidelines to banks in June 2004 on maintenance of capital charge for market risks on the lines of ‘Amendment to the Capital Accord to incorporate market risks’ issued by the BCBS in 1996. 7.1.1 Banks use a number of techniques to mitigate the credit risks to which they are exposed. For example, exposures may be collateralised in whole or in part by cash define ex works or securities, deposits from the same counterparty, guarantee of a third party, etc. The revised approach to credit risk mitigation allows a wider range of credit risk mitigants to be recognised for regulatory capital purposes than is permitted under the 1988 Framework provided these techniques meet the requirements for legal certainty as described in paragraph 7.2 below.

For the collateral, embedded options which may reduce the term of the collateral should be taken into account so that the shortest possible effective maturity is used. Iv) The amount of exposure reduced by the adjusted amount of collateral, will receive a risk weight as applicable to the counterparty, as it is an on- balance sheet exposure. A) The drawn and undrawn portions of an unrated eligible liquidity facility would attract a risk weight equal to the highest risk weight assigned to any of the underlying individual exposures covered by this facility. Ii) When a bank other than the originator provides credit protection to a securitisation exposure, it must calculate a capital requirement on the covered exposure as if it were an investor in that securitisation. If a bank provides protection to an unrated credit enhancement, it must treat the credit protection provided as if it were directly holding the unrated credit enhancement.

IPDI in excess of 15 per cent of Tier 1 capital may be included in Tier 2, and PNCPS in excess of the overall ceiling of 40 per cent ceiling prescribed vide paragraph 4.2.5 may be included under Upper Tier 2 capital, subject to the limits prescribed for Tier 2 capital. Any other item specifically allowed by the Reserve Bank from time to time for inclusion in Tier 1 capital. Interest-free funds remitted from abroad for the purpose of acquisition of property and held in a separate account in Indian books. Remittable surplus retained in Indian books which is not repatriable so long as the bank functions in India. Ii) An analysis of the bank’s CRAR under both the guidelines should be reported to the board at quarterly intervals. On 23 July 1954, a Cathay Pacific Douglas DC-4 (VR-HEU) from Bangkok to Hong Kong was shot down by aircraft of the People’s Liberation Army Air Force in the South China Sea near Hainan Island.

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However, as a result of the global economic situation, the Group reported an operating loss. Given the current economic climate, and in line with the steps being taken by other major airlines around the world, the airline has undertaken a comprehensive review of all its routes and operations. This has resulted in frequencies being reduced to certain destinations, ad hoc cancellations on other routes, deferred capital expenditure, parked aircraft and introduced a Special Leave Scheme for staff to conserve money.

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The credit equivalent amount should be arrived at by multiplying the principal amount of the exposure with a 100 per cent CCF, unless otherwise specified. The exposures of the Indian branches of foreign banks, guaranteed / counter-guaranteed by the overseas Head Offices or the bank’s branch in another country would amount to a claim on the parent foreign bank and would also attract the risk weights as per Table 5 above. I) In the case of banks where no capital adequacy norms have been prescribed by the RBI, the lending / investing bank may calculate the CRAR of the cooperative bank concerned, notionally, by obtaining necessary information from the investee bank, using the capital adequacy norms as applicable to the commercial banks. In case, it is not found feasible to compute CRAR on such notional basis, the risk weight of 350 or 625 per cent, as per the risk perception of the investing bank, should be applied uniformly to the investing bank’s entire exposure.

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It may please be noted that the HHI as a measure of concentration risk is only one of the possible methods and the banks would be free to adopt any other appropriate method for the purpose, which has objective and transparent criteria for such measurement. A) While assessing the exposure to concentration risk, a bank should keep in view that the calculations of Basel II framework are based on the assumption that a bank is well diversified. Additionally, if banks employ risk mitigation techniques, they should understand the risk to be mitigated and the potential effects of that mitigation, reckoning its enforceability and effectiveness, on the risk profile of the bank. # These ratings indicate the ratings assigned by Indian rating agencies/ECAIs or foreign rating agencies.

@ In case the amount invested is less than the threshold limit prescribed in para 5.8.2, the capital charge will be 9 per cent. Banks may apply a zero haircut for eligible collateral where it is a National Savings Certificate, Kisan Vikas Patras, surrender value of insurance policies and banks’ own deposits. Where the collateral is held by a custodian, banks must take reasonable steps to ensure that the custodian segregates the collateral from its own assets. Banks must have clear and robust procedures for the timely liquidation of collateral to ensure that any legal conditions required for declaring the default of the counterparty and liquidating the collateral are observed, and that collateral can be liquidated promptly. No transaction in which Credit Risk Mitigation techniques are used should receive a higher capital requirement than an otherwise identical transaction where such techniques are not used. I) The originator shall not provide any implicit support to investors in a securitisation transaction.

5.13.4 ‘Capital market exposures’ will attract a 125 per cent risk weight or risk weight warranted by external rating of the counterparty. 5.10.3 All other claims secured by residential property would attract the higher of the risk weight applicable to the counterparty or to the purpose for which the bank has extended finance. LTV ratio should be computed as a percentage with total outstanding in the account (viz. “principal + accrued interest + other charges pertaining to the loan” without any netting) in the numerator and the realisable value of the residential property mortgaged to the bank in the denominator.

It is recognised that the Pillar 3 disclosure framework does not conflict with requirements under accounting standards, which are broader in scope. The BCBS has taken considerable efforts to see that the narrower focus of Pillar 3, which is aimed at disclosure of bank capital adequacy, does not conflict with the broader accounting requirements. The Reserve Bank will consider future modifications to the Market Discipline disclosures as necessary in light of its ongoing monitoring of this area and industry developments. 12.2.1 Market discipline can contribute to a safe and sound banking environment.

The ICAAP should from an integral part of the management and decision-making culture of a bank. This integration could range from using the ICAAP to internally allocate capital to various business units, to having it play a role in the individual credit decision process and pricing of products or more general business decisions such as expansion plans and budgets. The integration would also mean that ICAAP should enable the bank management to assess, on an ongoing basis, the risks that are inherent in their activities and material to the institution.

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