The Qatar Financial Centre Regulatory Authority (QFCRA) has issued proposals regarding market risks by proposing to revise the approach to its calculation and other miscellaneous amendments for conventional and Islamic banks.

The QFCRA is seeking public comments on the proposed draft BANK and IBANK (Market Risk and Miscellaneous) Amendments Rules 2025.

The prudential banking framework in the QFC that applies to conventional banking business firms and Islamic banking business firms comprises the Banking Business Prudential Rules 2014 and Islamic Banking Business Prudential Rules 2015.

It is based on the international frameworks developed by the Basel Committee on Banking Supervision (BCBS) and the Islamic Financial Services Board (IFSB).

As part of its ongoing work programme to maintain consistency with these international frameworks, the QFCRA is proposing to revise the approach to the calculation of market risk capital requirements in the prudential framework.

The key amendment proposed in the draft rules to implement the simplified standardised approach or SSA is the introduction of scaling factors into the calculation of the market risk capital requirements.

Guidance is proposed in Islamic banks' prudential rules to clarify that a market risk capital requirement calculated for an Islamic finance contract may be subject to a scaling factor, as determined by the type of market risk to which the capital requirement relates.

The QFCRA proposes amendments to the specific risk capital requirements for interest rate risk as the key amendment is to ensure only Qatar Riyal denominated instruments issued by Qatar or certain other state institutions are, by default, subject to a 0% specific risk capital requirement, regardless of rating or maturity. This is to align with the credit risk treatment of relevant exposures in the prudential regulations for conventional and Islamic banks.

The QFCRA proposes to implement the simplified standardised approach to market risk measurement from the BCBS and IFSB frameworks.

It is also proposing to implement related miscellaneous amendments to introduce limits on QFC banks’ concentrations in foreign currencies.

Under the proposed rules, a QFC bank’s net open position in a foreign currency other than US dollar must not be greater than 5% of the bank’s Tier 1 capital; net open position in USD must not be greater than 25% of the bank’s Tier 1 capital; and total net open positions in surplus, or total net open positions in deficit, (whichever is higher) in all foreign currencies (including USD) must not be greater than 30% of the bank’s Tier 1 capital.

The proposals support the QFCRA's commitment to the maintenance of high international regulatory standards for financial services, and the continued development of the QFC as a leading financial and business centre in the Middle East.