Financial Markets Act, 2012 (Act No. 19 of 2012)RegulationsFinancial Markets Act RegulationsChapter VI : Central Counterparties25. Capital calculation requirements for operational risk25.1 Basic indicator approach |
| (1) | The capital requirement for operational risk under the Basic Indicator Approach must be 15% of a relevant indicator, in accordance with the parameters set out in this Regulation, which relevant indicator must be the average over three years of the sum of the net interest income and net non-interest income. |
| (2) | The three-year average must be calculated on the basis of the last three 12-monthly observations at the end of the financial year and in the event that audited figures are not available, business estimates may be used with the prior written approval and subject to such conditions as may be determined by the Authority. |
| (3) | If for any given observation, the sum of net interest income and net non-interest income is negative or equal to zero, this figure may not be taken into account in the calculation of the three-year average. |
| (4) | The relevant indicator must be calculated as the sum of positive figures divided by the number of positive figures. |
| (5) | Based on the accounting categories for the profit and loss account of a central counterparty, the relevant indicator must be expressed as the sum of the elements listed in subregulation (6), which elements must be included in the sum with its positive or negative sign. |
| (6) | The elements, which must to be adjusted to reflect the qualifications in subregulations (7) to (11) below, are— |
| (a) | interest receivable and similar income; |
| (b) | interest payable and similar charges; |
| (c) | income from shares and other variable or fixed-yield securities; |
| (d) | commissions or fees receivable; |
| (e) | commissions or fees payable; |
| (f) | net profit or net loss on financial operations; and |
| (g) | other operating income. |
| (7) | Expenditure on the outsourcing of services rendered by third parties may reduce the relevant indicator if the expenditure is incurred from an undertaking subject to supervision under, or equivalent to, these Regulations. |
| (8) | The indicator must be calculated before the deduction of any— |
| (a) | realised profits or losses arising from the sale of securities held in the central counterparty’s own book, including any relevant amounts relating to securities classified as "held to maturity" or "available for sale"; |
| (b) | provisions and operating expenses, which operating expenses must include fees paid for outsourcing services rendered by third parties which are not the holding company or subsidiary of the central counterparty or a subsidiary of a holding company which is also the holding company of the central counterparty; |
| (c) | extraordinary or irregular item; or |
| (d) | income derived from insurance. |
| (9) | The following elements may not be used in the calculation of the relevant indicator— |
| (a) | realised profits or losses from the sale of non-trading book items; |
| (b) | income from extraordinary or irregular items; |
| (c) | income derived from insurance. |
| (10) | In the event that revaluation of trading items form part of the profit and loss statement, revaluation may be included. |
| (11) | A newly established licensed central counterparty that does not have the required gross income data to calculate the required gross income amounts may with the prior written approval of, and subject to such conditions as may be determined by the Authority, use gross income projections for all or part of the three-year period. |