CAY CIMA issued a private sector consultation paper (PSCP) on regulatory policy and rules on domestically systemically important deposit taking institutions (D-SIDTIs).
Document dated Dec. 16, 2022, received Mar. 28, and summarized on Mar. 29, 2023.
Consultation Overview
Regulatory policy on D-SIDTIs is found in Appendix 1, which sets out, among others, the CAY CIMA's assessment methodology and supervisory expectations for D-SIDTIs.
The rule on D-SIDTIs is found in Appendix 2, which sets out, among others, regulatory obligations for institutions identified as being domestic systemically important.
D-SIDTIs Regulation
Proposal sets out CAY CIMA’s criteria for identifying and designating D-SIDTIs.
D-SIDTIs are institutions that could cause significant disruption to the Cayman Islands’ financial system and economy in the event of their distress or failure.
Also its approach to mitigating negative externalities posed by D-SIDTIs.
This includes regulatory and supervisory expectations aimed at reducing probability of their failure by, among others, increasing D-SIDTIs’ going-concern loss absorbency.
Criteria for Identifying D-SIDTIs
Proposed sets forth D-SIDTI framework and factors used to measure systemic importance; equal weighting is given to each factor category, including sub-factors.
For the size factor, off-balance sheet assets are considered as part of supervisory overlay process rather than directly within the quantitative approach of the framework.
For substitutability factor, payments activity is considered under supervisory overlay.
The complexity factor considers volume and nature of over-the-counter derivatives.
An additional factor to incorporate domestic context is included in D-SIDTI framework.
This additional factor is based on resident deposits from households in the Cayman.
Consultation
Comments will be accepted until Feb. 1, 2023.
May 2023 CAY CIMA Final Rule
On May 29, 2023, CAY CIMA issued summary of comments received on consultation.
Final Rule and Policy on domestically systemically important deposit taking institutions.
In some instances, amendments were made to proposal in response to comments.
Measure published in May 26, 2023 Extraordinary Gazette, effective May 27, 2024.
