Collateralized No recognition For financial Financial transactions collateral only, the collateral does not rule provides two include collateral approaches: such as real estate or chattel. In all cases the System institution must 1. Simple approach have a perfected, 1st priority A System institution interest. may apply a risk weight to the portion of an exposure that is For the simple secured by the fair approach there must value of collateral be a collateral by using the risk agreement for at weight of the least the life of collateral – with a the exposure; general risk weight collateral must be floor of 20%. revalued at least every 6 months; collateral other than gold must be 2. Collateral in the same haircut approach currency. A System institution may use standard supervisory haircuts for eligible margin loans, repo- transactions, and collateralized derivative contracts. 20. Disclosure Requirements -- §§ 628.61 – 628.63 (including Tables 1 – 10)
Collateralized transactions No recognition For financial collateral only, the rule provides two approaches: 1. Simple approach A System institution may apply a risk weight to the portion of an exposure that is secured by the fair value of collateral by using the risk weight of the collateral – with a general risk weight floor of 20%. 2. Collateral haircut approach A System institution may use standard supervisory haircuts for eligible margin loans, repo- transactions, and collateralized derivative contracts. Financial collateral does not include collateral such as real estate or chattel. In all cases the System institution must have a perfected, 1st priority interest. For the simple approach there must be a collateral agreement for at least the life of the exposure; collateral must be revalued at least every 6 months; collateral other than gold must be in the same currency. 20. Disclosure Requirements -- §§ 628.61 – 628.63 (including Tables 1 – 10)
81%20FR%2049720.docx