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PIB A4.11.2

Where Exposures to a client are guaranteed by a third party, or secured by Collateral issued by a third party, an Authorised Firm may:

(a) provided the Collateral meets the requirements of PIB section 4.13 (Credit Risk mitigation), and would be assigned a lower risk weight under PIB section 4.12, treat that portion of the Exposure which is secured by Collateral as an Exposure to the third party. An Authorised Firm must treat the portion secured by Collateral as having being incurred to the third party providing the Collateral rather than to the Client for the purposes of considering the limits as set out at PIB Rule 4.15.5; or
(b) provided the guarantee meets the requirements of PIB section 4.13 (Credit Risk mitigation), and would be assigned a lower risk weight under PIB section 4.12, treat that portion of the Exposure which is guaranteed as an Exposure to the third party. An Authorised Firm must treat the portion guaranteed as having being incurred to the third party rather than to the Client for the purposes of considering the limits as set out at PIB Rule 4.15.5. When considering the guarantee there must not be any maturity mismatch between the guarantee and the underlying Exposure.
Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]