Regulatory Alerts2010-12-13
Instruction No. 2010-I-07 on the Authorization Application File for Accounting for the Effects of Financial Collateral under Article 5 III of Regulation No. 93-05
The Prudential Control Authority issued Instruction No. 2010-I-07 to establish the specific documentation requirements for financial institutions seeking authorization to apply the advanced internal ratings-based approach for financial collateral under Regulation No. 93-05. The instruction mandates that eligible establishments submit a comprehensive application file in French, including detailed descriptions of the scope, collateral systems, valuation methodologies, and internal validation reports, to the Authority's General Secretariat. This regulatory framework ensures that institutions can accurately account for the risk-reduction effects of financial collateral in their large exposure controls, with the instruction entering into force on December 31, 2010.