Chapter:	155L	Title:	Banking (Capital) Rules	Gazette Number:	L.N. 156 of 2012
Section:	124	Heading:	Recognized collateral	Version Date:	01/01/2013

Collateral is recognized for the purposes of calculating the risk-weighted amount of an exposure of an authorized institution where¡X

(a) all documentation creating the collateral and providing for the obligations of the parties with respect to each other in respect of the collateral is binding on all parties and legally enforceable in all relevant jurisdictions;
(b) the legal mechanism by which the collateral is pledged or transferred ensures that the institution has the right to realize, or to take legal possession of, the collateral in a timely manner in the event of a default by, or the insolvency or bankruptcy of, or any other event specified in the relevant legal documentation applicable to any of¡X
(i) the obligor in respect of the exposure; or
(ii) the custodian, if any, holding the collateral;
(c) the institution has clear and adequate procedures for the timely realization of collateral in respect of an event referred to in paragraph (b);
(d) the institution has taken all steps to fulfil requirements under the law applicable to the institution's interest in the collateral which are necessary to obtain and maintain an enforceable security interest, whether by registration or otherwise, or to exercise a right to set-off in relation to title transfer collateral;
(e) if the collateral is to be held by a custodian, the institution has taken reasonable steps to ensure that the custodian segregates the collateral from the custodian's assets;
(ea) if the collateral is provided under a margin agreement for OTC derivative transactions, credit derivative contracts or SFTs, the institution¡X
(i) has devoted sufficient resources to enable the orderly operation of the agreement; and
(ii) has collateral management policies in place to control, monitor and report¡X
(A) risks (including liquidity risk and concentration risk) associated with the agreement;
(B) reuse of collateral; and
(C) the rights ceded by the institution in respect of collateral posted; (L.N. 156 of 2012)
(f) there is no material positive correlation between the credit quality of the obligor in respect of which the institution has an exposure and the current market value of the collateral provided in respect of the exposure; (L.N. 156 of 2012)
(g) the collateral¡X
(i) is pledged for not less than the life of the exposure; and
(ii) is revalued not less than every 6 months from the date upon which the collateral is taken in respect of the exposure; and
(h) the collateral falls within section 125(1)(a), (b), (c), (d), (e), (f) or (g). (L.N. 156 of 2012)