Banks Act, 1990 (Act No. 94 of 1990)

Notices

Designation of an Activity not Falling within the meaning of "The Business of a Bank"

Exemption Notice relating to Securitisation Schemes

10. Transactions included in the trading book
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1)Conditions relating to transactions included in the trading book of a bank
a)A bank, including a bank acting in a primary role, may enter into transactions with a special-purpose institution, which transactions are subsequently included in the trading book of the said bank, provided that-
i)there shall be no recourse to the bank beyond the fixed contractual obligations provided for in the transaction that is included in the trading book of the bank;
ii)there shall be no obligation on the bank to enter into any further transaction(s) with the special-purpose institution;
iii)the transactions that are included in the trading book of the bank shall be entered into in accordance with market related terms and conditions;
iv)the transactions that are included in the trading book of the bank shall not involve the acquisition of-
A)commercial paper issued by the special-purpose institution; or
B)assets, risk or a beneficial interest in assets, held by the special-purpose institution in terms of a traditional or a synthetic securitisation scheme, other than in accordance with the provisions of this Schedule.
b)The relevant provisions of the Regulations relating to Banks shall apply to any transaction entered into between a bank and a special-purpose institution in respect of a traditional or synthetic securitisation scheme, which transaction-
i)is included in the trading book of the said bank;
ii)complies with the conditions specified in item (a) above.
c)When a bank enters into a transaction with a special-purpose institution in respect of a traditional or synthetic securitisation scheme, which transaction is included in the trading book of the bank, and the transaction does not comply with the conditions specified in item (a) above, the transaction concerned shall be regarded as a first-loss credit-enhancement facility in terms of this Schedule read with the provisions of regulation 23(6)(h) of the Regulations relating to Banks.