• Custody and investment risk

    • MIR 4.7.35

      A Recognised Clearing House must have effective means to address risks relating to:

      (a) custody of its own assets (or banking of its cash), in accordance with Rule 4.7.36; and
      (b) custody of its Members and other participants' assets in accordance with Rule 4.7.37.

    • MIR 4.7.36

      For the purposes of Rules 4.7.35(a) and 4.7.35(b), a Recognised Clearing House must:
      (a) hold its own deposits and custody assets only with entities which have been granted Financial Services Permission by the Regulator or in banks or credit institutions regulated by a non‐Abu Dhabi Global Market Financial Services Regulator considered by the Regulator to be equivalent for such purposes;
      (b) be able to have prompt access to its deposits and custody assets when required; and
      (c) regularly evaluate and understand its exposures to entities which hold its assets, including the monitoring of the overall risk exposure to an individual banker or custodian remains within acceptable concentration limits and of the bank or custodian's financial condition on an on‐going basis.

    • MIR 4.7.37

      For the purposes of investing its own or its participants' deposits and custody assets, a Recognised Clearing House must ensure that:

      (a) it has an investment strategy which is consistent with its overall risk-management strategy and is fully disclosed to its Members and other participants using its facilities; and
      (b) its investments comprise instruments with minimal credit, market, and liquidity risks. For this purpose, the investments may be secured by, or be claims on, high-quality obligors, or the arrangements allow for quick liquidation with little, if any, adverse price effect, or there is no investments in obligors affiliated with or securities issued by the participant.