Document ID: chunk:federal_register_of_legislation:F2024L01073:reg:4:p19
Version: federal_register_of_legislation:F2024L01073
Segment Type: reg
Provision Reference: reg 4 (pt 19/21)
Character Range: 127345–130231

and the Asian Infrastructure Investment Bank.

[7]  This may include on-balance sheet exposures such as loans and off-balance sheet exposures such as self-liquidating trade-related contingent items.

[8]  For this purpose, short-term refers to an exposure with a maturity less than 12 months.
[9]  Subordinated debt which is structured for the purpose, or has the effect, of conveying the economic substance of equity ownership, must be treated as an equity exposure.

[10]  Indirect equity interests include holdings of derivative instruments tied to equity interests and holdings in corporations, partnerships, limited liability companies, trusts or other types of entities that issue ownership interests and are engaged principally in the business of investing in equity instruments.

[11]  The risk-weighting of equity exposures in banking or insurance subsidiaries at Level 1 is subject to the deduction threshold detailed in Attachment D to APS 111.

[12]  External valuation fees, external legal fees, external advisory fees, and the collection of fees by an ADI on behalf of a third-party service provider (e.g. collateral agent) do not vitiate this condition.

[13]  The terms of the arrangement must explicitly confer sole discretion on the ADI to control drawdown.

[14]  For this purpose, independent party refers to a party independent of the borrower's relationship manager. The independent party should sit within the risk function of the business unit or the centralised risk function. Operational or back office teams that perform documentary checks are not adequate for this purpose.

[15]  These items must be weighted according to the type of asset and not according to the type of counterparty with whom the transaction has been entered into.

[16]  These items must be weighted according to the type of asset and not according to the type of counterparty with whom the transaction has been entered into.

[17]  For the purpose of this item, short-term means a maturity less than 12 months.

[18]  A solicited rating is a rating that has been initiated and paid for by the issuer or rated counterparty or a commercial associate of the issuer or rated counterparty. Sovereign exposures are excluded from the requirement to use solicited ratings.

[19]  Cash-funded credit-linked notes issued by the ADI against exposures in the banking book that fulfil the criteria for credit derivatives detailed in Attachment J to this Prudential Standard, may be treated as cash collateralised transactions.

[20]  When debt securities that do not have an issue-specific rating are issued by a rated sovereign, ADIs may treat the sovereign issuer rating as the rating of the debt security.

[21]  The use of derivative instruments by a trust to hedge investments listed in paragraphs 14(a) to 14(e) of this Attachment would not prevent units in the trust from being recognised as