in force 2025-01-01 MODIFIED+726 −70§
Amended by Regulation (EU) 2024/1623 32024R1623 · Regulation (EU) 2024/2987 32024R2987 · Regulation (EU) 2024/2795 32024R2795
applies from: unchanged
Paragraph 2 no longer sets a single rule for using units or shares in a non-fully-eligible CIU as collateral, but instead splits treatment into two cases depending on whether the institution applies the look-through approach under Article 132a(1) or 152(2), or the mandate-based approach under Article 132a(2) or 152(5), for direct exposures to the CIU.
Under the look-through case the eligible collateral amount is tied to the value of the instruments held by the CIU that are eligible under Article 197(1) and (4) and the items in paragraph 1, point (a), while the mandate-based case retains the prior assumption that the CIU or its underlying CIUs invested in non-eligible instruments to the maximum extent their mandates allow.
The text also replaces references to non-eligible and eligible "assets" with references to non-eligible and eligible "instruments" throughout the calculation rules that follow.
Cited: Art. 198, v2 · Art. 198, v1
text before / after
02013R0575-20240709 → 02013R0575-20250101
Article 198
Additional eligibility of collateral under the Financial Collateral Comprehensive Method
1. In addition to the collateral established in Article 197, where an institution uses the Financial Collateral Comprehensive Method set out in Article 223, that institution may use the following items as eligible collateral:
(a) equities or convertible bonds not included in a main index but traded on a recognised exchange;
(b) units or shares in CIUs where both the following conditions are met:
(i) the units or shares have a daily public price quote;
(ii) the CIU is limited to investing in instruments that are eligible for recognition under Article 197(1) and (4) and the items mentioned in point (a) of this subparagraph.
In the case a CIU invests in units or shares of another CIU, conditions (a) and (b) of this paragraph equally apply to any such underlying CIU.
The use by a CIU of derivative instruments to hedge permitted investments shall not prevent units or shares in that undertaking from being eligible as collateral.
2. Where the CIU or any underlying CIU are not limited to investing in instruments that are eligible for recognition under Article 197(1) and (4) and in the items mentioned referred to in paragraph 1, point (a) of paragraph 1 (a), of this Article, the following shall apply:
(a) where institutions apply the look-through approach referred to in Article 132a(1) or 152(2) for direct exposures to a CIU, they may use units or shares in that CIU as collateral up to an the amount equal to the value of the eligible assets instruments held by that CIU, that are eligible under Article 197(1) and (4), and the items referred to in paragraph 1, point (a), of this Article;
(b) where institutions apply the mandate-based approach referred to in Article 132a(2) or 152(5) for direct exposures to a CIUs, they may use units or shares in that CIU as collateral up to the amount equal to the value of the instruments held by that CIU, that are eligible under Article 197(1) and (4), and the items referred to in paragraph 1, point (a), of this Article under the assumption that that CIU or any of its underlying CIUs have invested in non-eligible assets instruments to the maximum extent allowed under their respective mandates.
Where non-eligible assets instruments can have a negative value due to liabilities or contingent liabilities resulting from ownership, institutions shall do both of the following:
(a) calculate the total value of the non-eligible assets; instruments;
(b) where the amount obtained under point (a) is negative, subtract the absolute value of that amount from the total value of the eligible assets. instruments.