Leverage Ratio Framework

The accounting for regular-way purchases or sales 3 of financial assets that have not been settled (hereafter “unsettled trades”) differs across and within accounting frameworks. Unsettled trades can be accounted on the trade date (trade date accounting) or on the settlement date (settlement date accounting). For the purpose of the Leverage ratio exposure measure, treatment should be as below: (i) Banks using trade date accounting: must reverse out any offsetting between cash receivables for unsettled sales and payables for unsettled purchases of financial assets that may be recognized under the applicable accounting framework, but may offset between those cash receivables and cash payables (regardless of whether such offsetting is recognized under the applicable accounting framework) if the following conditions are met: a. The financial assets bought and sold that are associated with cash payables and receivables are fair valued through income and included in the bank's regulatory trading book as specified in Boundary between the banking book and the trading book in the Minimum Capital Requirement for Market Risk issued by SAMA. b. The transactions of the financial assets are settled on a delivery- versus-payment (DVP) basis. (ii) Banks using settlement date: accounting will be subject to the treatment set out in paragraph 7.4 off-balance sheet items below.