Page 35 - Annual Report 2020
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The Supervision and Authorisation division was COVID-19 Division-wide Thematic Reviews
restructured with effect 1 March 2020, reducing the
number of departments to five by grouping the firms The outbreak of the global pandemic posed
under supervision according to the dominant regulation unprecedented challenges to authorised firms Interbank Offered Rates (IBOR) Transition
style, namely prudential or conduct. The division now and the work of supervisors. The focus areas to Alternative Reference Rates (ARR)
consists of five departments: Authorisation; Bank and identified for 2020 were cast under a more
Insurance Supervision; Investment Manager, Advisor penetrating spotlight with enhanced urgency. Following developments in the global markets that Most firms with IBOR exposure indicated that they
and Securities Supervision; Anti-Money Laundering/ revealed weaknesses in IBORs’ sustainability as a had conducted comprehensive assessments of
Combating the Financing of Terrorism (AML/CFT) Since the onset of COVID-19, Supervision actively reference rate, the Financial Conduct Authority, amongst how IBOR affected their business by involving a
Supervision; and Macroprudential Analysis. engaged with authorised firms to assess the impact others, declared in 2017 that after 31 December 2021, it sufficiently diverse range of stakeholders to identify
of the pandemic, specifically focusing on: will no longer require banks to make LIBOR submissions. vulnerabilities and reliance on benchmarks.
Interaction continued with firms to assess their
• Credit risk and asset quality – credit
readiness for the implementation of the revised In response, the replacement of IBOR has Most firms demonstrated adequate IT systems and
underwriting criteria and exposure quality;
Governance and Controlled Functions Rules (CTRL) become a priority for global regulators, software to ensure they can process contracts that
• Impact on profitability/business models;
2020, corporate governance arrangements for data including the Regulatory Authority. reference overnight rates and cope with any changes
• The interest rate environment;
protection and cybersecurity, and implementation of triggered by the IBOR transition. Also, most institutions
• Liquidity conditions; and
the Regulatory Authority’s updated AML/CFT rules In 2020, the Regulatory Authority launched a thematic had appropriate senior management and board
• The concentration of exposures in financial
following Law No. 20 of 2019 on Combatting Money review designed to ascertain firms’ preparedness oversight over the IBOR transition process within
services, real estate and construction.
Laundering and Terrorism Financing in the State of Qatar. and quantifying the exposure of banks, insurers and their organisations, with dedicated project managers
Supervision also required all firms to report on their investment managers for the IBOR transition. accountable for implementing the transition programme.
Work progressed on the refinement and internal business continuity arrangements to ensure that
benchmarking of risk-rating models, taking into QFC firms continued to operate effectively despite The thematic review was conducted by surveying The Regulatory Authority will continue to
account the vulnerabilities highlighted by the the operational challenges posed by COVID-19. regulated firms to assess the extent of exposures monitor firms’ level of preparedness and
COVID-19 pandemic. and their ability to manage IBOR transition-related ability to mitigate IBOR transition risks.
The division successfully employed technology risks. The questions included examples of what
solutions to accommodate and comply with the Regulatory Authority considers standards
remote working and social distancing requirements of best practice for prudential and conduct risk
implemented in mid-March 2020. mitigation measures concerning IBOR transition.
Business continuity arrangements proved to be robust One-third of QFC institutions survey indicated
at firms and the Regulatory Authority. Technology-based that they have exposure to IBOR. These are
communication, robust IT infrastructure, and solid mostly corporate banks, investment banks, and
capital and liquidity buffers were the most critical factors investment managers. Insurance and intermediary
contributing to authorised firms’ resilience. The use of firms tended not to have IBOR exposure.
technology solutions to maintain the necessary rigour
of on and offsite supervision yielded positive results.
T ABLE OF C ONTENT S
