Circular D4 96/1 Regulation on Own Funds (Definitions of Certain Concepts in the Regulation)

1.
COMMISSION BANCAIRE ET FINANCIERE
Brussels, 18 June 1996.

CIRCULAR D4 96/1 TO STOCK EXCHANGE COMPANIES
REGULATION ON OWN FUNDS

Sir,
Madam,

The Decree of the Banking and Finance Commission of 5 December 1995 concerning the regulation on own funds of stock exchange companies refers to the notion of specified stock exchanges and clearing houses (cf. Article 2, 9th, para. 2), to the notion of recognized rating agencies (cf. Article 37, para. 1, 3rd), to that of broadly diversified indices (cf. Article 59, § 3), and to geographical zones A and B (Art. 2, 13th).

The purpose of this circular is to define these notions necessary for the determination of own fund requirements and the application of norms regarding risk concentration resulting from the aforementioned decree.

A. Specified stock exchanges, referred to in Article 2, 9th, para. 2, are considered to be stock exchanges for securities and financial instruments of the countries of the European Union and the Group of Ten.

The countries of the Group of Ten, excluding those members of the European Union, are Canada, the United States, Japan, and Switzerland.

In Belgium, the specified stock exchanges are:

• The Society of the Brussels Stock Exchange for Securities;
• The Society of the Antwerp Stock Exchange for Securities;
• Belfox S.C.

Avenue Louise 99 1050 Brussels Tel.: (02)535.22.11 . Fax: (02)535.23.23.

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B. Specified clearing houses, referred to by Article 2, 9th, para. 2, are those ensuring the clearing and settlement of operations carried out on the specified stock exchanges referred to in point A above.

In Belgium, the specified clearing houses are:

• The Cooperative for the Settlement of Markets of the Society of the Brussels Stock Exchange for Securities S.C.R.L.;
• The Settlement Fund for Cash Operations (Antwerp Stock Exchange);
• Belfox S.C.

C. The recognized rating agencies referred to in Article 37, para. 1, 3rd, as well as the minimum rating levels to consider a debt security issuer as eligible within the meaning of Article 37, are set out in the following table.

Recognized Rating Agencies	Minimum Rating
	For Long Term	For Short Term (< 1 year)
Moody's Investor Service	Baa3	P3
Standard & Poor's Corporation	BBB/BB	BBB
Thomson Bankwatch	A3	A3

Short-term and long-term ratings are to be considered independently of one another.

D. The following indices are considered as broadly diversified stock indices within the meaning of Article 59, § 3:

• All Ords (Australia)
• ATX (Austria)
• BEL 20 (Belgium)
• CAC 40 (France)
• DAX 30 (Germany)
• FTSE 100 (United Kingdom)
• FTSE mid-250 (United Kingdom)
• IBEX 35 (Spain)
• AEX 25 (Netherlands)
• Nikkei 225 (Japan)
• OHX (Sweden)
• SE1 (Switzerland)
• TSE 35 (Canada)
• S&P 500 (United States)
• S&P 100 (United States)

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E. The countries of geographical zone A, referred to in Article 2, 13th, are:

• the full member countries of the Organisation for Economic Co-operation and Development (OECD), namely:
  Germany, Australia, Austria, Belgium, Canada, Denmark, Spain, United States, Finland, France, Greece, Hungary, Ireland, Iceland, Italy, Japan, Luxembourg, Mexico, Norway, New Zealand, Netherlands, Portugal, United Kingdom, Sweden, Switzerland, Czech Republic, Turkey.
• the countries that have concluded special lending agreements with the International Monetary Fund (IMF) under the General Agreements to Borrow of the IMF, namely Saudi Arabia.

Any country that has rescheduled its external public debt is excluded from geographical zone A for a period of five years.

The countries of geographical zone B are those that do not belong to geographical zone A.

The definitions set out above may be modified by circular by the Banking and Finance Commission.

I have arranged for a copy of this circular to be sent to you, Sir, Madam,

the expression of my sentiments