Page 42 - Annual Report 2017

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The Supervision and Authorisation division comprises39 staff SUPERVISION evaluate the options available to the Regulatory Authority in the necessitated by the release of new Islamic Banking Rules (Islamic
and consists of the Authorisation, Supervision (comprising the implementation of the LCR and NSFR requirements. Banking Business Prudential Rules 2015, effective 1 April 2017), and
Bank Supervision, Insurance Supervision and Investment In 2017, the second phase of the QIS covered additional enhanced analysis for the MNSFR and MLR, referenced above.
Management Supervision departments), Anti-money Laundering/ reporting periods from 31 March to 30 June 2017 to allow for
Combating the Financing of Terrorism (AML/CFT), and The Bank Supervision, Insurance Supervision and Investment additional calibration with data on the use of foreign currency Banking charts
Macroprudential Analysis teams. Management Supervision departments are responsible for the
effective ongoing supervision of authorised institutions and high quality liquid assets. In November 2017, the third phase of The department held meetings with firms’ senior management,
In 2017, the division concentrated on the regulation of liquidity risk, individuals. the QIS commenced. The notable change in this phase was the governing bodies and external auditors to review and discuss the
the implementation of new accounting for financial instruments, introduction of the Modified NSFR (MNSFR), which has a model latest prudential returns. Key charts were used to analyse trends
and the collection, analysis and application of information on The Regulatory Authority operates a risk–based approach to similar to the NSFR, but better reflects QFC banks’ funding structures, and identify emerging risks, strengthening the Regulatory Authority’s
prudential returns. The insurance team conducted thematic reviews supervision that allows it to focus on issues most likely to impact and the Minimum Liquidity Rate (MLR). Both the MLR and the MNSFR risk-based approach to supervision.
of medical and motor insurance business lines, while the division’s its objectives and to allow for a more efficient use of resources. seek to strike a balance between managing liquidity risk and Please see page 52 for a selection of banking charts documenting
AML/CFT team evaluated and enhanced risk-rating models and The department maintains regular contact with the industry achieving proportionality. some key trends per risk category, relevant to the Regulatory
worked closely with State officials on this national effort. Actions and by performing regular analyses of business intelligence reports The results of the QIS will inform the Regulatory Authority’s position Authority’s authorised banks. These charts illustrate the type of
decisions were informed by the division’s expert macroprudential generated from the prudential returns submitted in the eXtensible on the proposed Liquidity Risk Rules expected to be implemented information that is analysed by supervisors on an ongoing basis
analysts, who considered ramifications of the Saudi-led blockade of Business Reporting Language (XBRL)-based reporting platform in the first half of 2018. and is available to the Regulatory Authority’s senior management.
Qatar among other global issues, to inform the work of the various with accompanying explanations supplied by authorised firms,
departments. conducting on-site and off-site risk assessments as necessary, Thematic review on impact of
and providing and seeking feedback on findings to individual Investment Management Supervision
firms’ governing body, senior management and other approved the Saudi-led blockade
Risk Assessment Visits individuals.
In response to regional events that commenced on 5 June Investment Management Supervision was responsible for ongoing
As an important part of its risk-based approach to supervision, the The Supervision departments also participate in local and global 2017, Bank Supervision generated additional liquidity reporting supervision of 10 investment management and advisory firms during
Regulatory Authority conducts risk assessments of specific firms supervisory colleges to enhance collaboration with other regulators requirements. The requirements provide granular data on a weekly 2017. Certain firms report on a monthly basis and others quarterly.
and intermediaries in addition to thematic and sectorial reviews. in the State of Qatar and internationally. Prudential and conduct basis on the impact of the blockade on QFC firms. Return reviews are conducted during the month after submissions
To ensure that the Regulatory Authority uses its resources effectively supervision are both conducted by the same supervisor for each are received and this off-site supervision is augmented by regular
to mitigate risks to its statutory objectives, documented supervisory firm, which is deemed appropriate given the current nature, scale IFRS 9 (Financial Instruments) implementation interaction with senior management at firms and risk assessment
engagement strategies are in place for each firm. These strategies and complexity of the authorised firms’ universe. visits. Further focus areas during the year are discussed below.
are reviewed annually and periodically thereafter to ensure that The International Accounting Standards Board issued International
the relevant identified risks, including emerging risks, are evaluated Bank Supervision Financial Reporting Standard (IFRS) 9 - Financial Instruments in July Product returns framework
efficiently by the individual Supervision departments and mitigated 2014.
with the most appropriate tools. Regulated institutions are required to apply IFRS 9 for annual Following the enhancement of IOSCO standards for investor
protection and fund management practices in 2016, Investment
One such tool is the conduct of Risk Assessments Visits (RAVs) of Bank Supervision was responsible for ongoing supervision of 25 periods beginning on or after 1 January 2018. Under this accounting Management implemented a set of new Product Returns (PRs)
regulated firms, with a number of RAVs conducted in a risk-based banking and advisory firms during 2017. Beyond the performance standard, the move to an expected credit loss impairment to supervise and analyse investment products marketed, sold or
manner during 2017. One important enhancement was the roll- of monthly return reviews, periodic bilateral and trilateral meetings approach for loans and other exposures represents an area of managed by QFC firms.
out of reviews in conjunction with experts from the Regulatory with firms and auditors, and risk assessment visits, additional areas significant change. The Regulatory Authority has monitored the
Authority’s AML/CFT department as an integral part of the risk of focus during the year are discussed below. state of preparedness and, going forward, will monitor the impacts The first phase, which covers banks, investment managers and
assessment process, rather than conducting separate reviews. A key Liquidity risk framework closely. advisory firms, has been established. The second phase will include
result of these RAVs was the production and issue of risk mitigation insurance products, as well as a complete trend analysis for all
programmes to relevant firms and their subsequent implementation, In 2016, to ensure compliance with the Basel Committee on Banking Prudential returns investment products.
all actively monitored by the Supervision departments. Supervision’s reforms on liquidity risk, the Supervision division ran The department is in the fourth year of the implementation of new
the first of a three-phase Quantitative Impact Study (QIS) on the prudential returns and management information derived from the
key liquidity risk metrics, Liquidity Coverage Ratio (LCR) and Net XBRL-based reporting platform. This initiative has resulted in better
Stable Funding Ratio (NSFR). The QIS covered the reporting quarters quality data for the ongoing supervision and monitoring of regulated
ending June, September and December 2016, and was used to firms. Improvements to the returns process are in development,