22.When determining the risk weight for a bank’s equity investment in a fund, a bank must apply a leverage adjustment to the average risk weight of the fund as calculated above.

23.Leverage for a fund is calculated as the ratio of total fund assets (not risk weighted) to total fund equity. Under the LTA, this ratio should be calculated from the information obtained on the fund’s asset holdings and financing. Under the MBA, banks should assume the maximum financial leverage permitted in the fund’s mandate, or the maximum permitted under the regulations governing the fund.