Page 37 - Annual Report 2020

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Risk-rating methodology
The Regulatory Authority’s IMAS Supervision adopted a
new risk rating methodology in 2020. The methodology
enhanced the integration of quantitative measures
through direct linkage to regular prudential reports
and integration with market metrics and analytics.
Under the new methodology, the ratings for each
firm align IMAS to Banking and Insurance risk ratings
and are now used to assess when to review firms.
Collective investment schemes
Investment Management implemented a system to
supervise investment products sold or managed by all
QFC firms. Investment funds registered in Europe are
the main products sold by QFC firms. Most allocated
products are invested primarily in equities, while
assets booked in fixed income funds increased.
Product returns framework
Following the enhancement of IOSCO recommendations
for funds, Investment Management reviewed the
standards used to collect information and modified
the format to be implemented for managed
funds. The modifications addressed IOSCO’s
2020 recommendations for funds’ leverage. The
implementation is undergoing technical modification
to share the same repository system and format used
for business returns. It includes investment-linked
products allocated by insurance intermediaries.
Risk assessment visits
Nine risk assessment visits were conducted
during the year as part of an ongoing monitoring
process of advisors, intermediaries and investment
managers in the QFC. RAVs focused on business
models, customer classification, and compliance
and conduct risk (including AML/CFT). The results
of the RAVs were satisfactory, with generally
fewer adverse findings than in 2019.
Authorisation
The Authorisation department is responsible
for assessing and approving applications from
firms and individuals seeking authorisation
from the Regulatory Authority to conduct
regulated activities in or from the QFC.
The department also acts as the interface between
applicants and the Companies Registration
Office of the QFC Authority regarding their
registration or incorporation in the QFC.
During 2020, Authorisation met with a broad range
of prospective applicants to discuss their proposals
and subsequently review their submitted regulatory
business plans. When a plan is deemed viable and
approved to proceed, Authorisation includes the
proposed supervisor as an active participant in the
assessment to ensure all issues are understood and
managed appropriately once the firm is authorised
and subsequently transferred to supervision. Details
of authorised firms are set out in Annex 1.
During the year, one bank, two insurers, two
advisory firms and three investment management
firms were authorised. The number of individuals
approved by the Regulatory Authority to perform
controlled functions at authorised firms at year-
end was 378, a net increase of 34 over the year.
Macroprudential Analysis
In 2020, under the Regulatory Authority’s risk-based
supervision framework, the Macroprudential Analysis
department provided insights on macroeconomic
and financial stability to microprudential supervisory
staff, senior management, and the Board of Directors.
Macroprudential surveillance operates alongside
microprudential (entity level) surveillance to assist
supervisors in their efforts to prevent or mitigate the
effects of risks identified. Macroprudential surveillance
assisted the Regulatory Authority in identifying and
assessing important changes in the financial sector
(i.e. banking, insurance, and investment management),
as well as macroeconomic factors affecting these
markets; delivering value-added quantitative and
qualitative information for forward-looking monitoring;
and detecting macro-financial issues that may affect
the Regulatory Authority’s authorised firms.
Monitoring and reporting
The department produced quarterly macroprudential
updates, which included ongoing assessment
of the impact of the COVID-19 pandemic on the
global energy market and the Qatari economy. The
assessment identified existing and emerging risks and
macroeconomic factors that could affect domestic
financial stability, including potential threats emanating
from Qatar’s position in the energy market.
QF CR A ANNU AL REP OR T 2020
Industry statistics and financial data
The Macroprudential Analysis department produced
internal quarterly fact sheets that provided a macro
view of the Regulatory Authority’s authorised firms.
The fact sheets are based on standardised aggregated
sectors’ data and reveal trends and developments
through tables and graphs. The fact sheets included
analyses and trends concerning the sectors’ size and
structure, business activity by license type, geography,
and corporate structure. They also included analyses
and trends of balance sheet and off-balance sheet
items, profitability and performance ratios, early
warning ratios, and key financial institution risk
measures (credit, liquidity, operational and market).
COVID-19 Weekly Updates
In light of COVID-19, the department’s first quarterly
Macroprudential Review for 2020 summarised
the potential economic and financial effects of the
coronavirus on Qatar and reviewed the implications
of the virus on global economic activity and growth.
The report identified the virus’s impact on
global energy markets to be the largest and
most detrimental transmission channel to affect
Qatar’s macroeconomic and financial stability.
T ABLE OF C ONTENT S