In general, terms in this Standard have the meanings defined in other Regulations and Standards issued by the Central Bank. In addition, for this Standard, the following terms have the meanings defined in this section.

1. a.A central counterparty (CCP) is an entity that interposes itself between counterparties to contracts traded within one or more financial markets, becoming the legal counterparty such that it is the buyer to every seller and the seller to every buyer.
2. b.A clearing member (CM) is defined as a member of, or direct participant in, a CCP that is entitled to enter into transactions with the CCP.
3. c.A clearing member client is defined as a party to a cleared transaction associated with a CCP in which a CM either acts as a financial intermediary with respect to the party or guarantees the performance of the party to the CCP.
4. d.Commitment means any contractual arrangement that has been offered by the bank and accepted by the client to extend credit, purchase assets or issue credit substitutes. It includes any such arrangement that can be unconditionally cancelled by the bank at any time without prior notice to the obligor. It also includes any such arrangement that can be cancelled by the bank if the obligor fails to meet conditions set out in the facility document, including conditions that must be met by the obligor prior to any initial or subsequent drawdown arrangement.
5. e.General provisions or general loan loss reserves are reserves held against future, presently unidentified losses that are freely available to meet losses which subsequently materialize. Provisions ascribed to identify deterioration of particular assets or known liabilities, whether individual or grouped, should be excluded.
6. f.A multi-level client structure is one in which banks can centrally clear as indirect clients; that is, when clearing services are provided to the bank by an institution which is not a direct CM, but is itself a client of a CM or another clearing client. The term “higher level client” refers to the institution that provides clearing services.
7. g.A netting set is a group of contracts with a single counterparty subject to a legally enforceable agreement for net settlement, and satisfying all of the conditions for netting sets specified in this Standards.
8. h.Potential future exposure (PFE) is an estimate of the potential increase in exposure to counterparty risk against which regulatory capital must be held.
9. i.A qualifying central counterparty (QCCP) is a CCP that meets the conditions for QCCPs established by the Central Bank.
10. j.Regular-way purchases or sales are purchases or sales of financial assets under contracts for which the terms require delivery of the assets within the time frame established generally by regulation or convention in the marketplace concerned.
11. k.The remaining maturity of a derivative transaction is the time remaining until the latest date at which the contract may still be active. If a derivative contract has another derivative contract as its underlying (for example, a swaption) and may be physically exercised into the underlying contract (that is, a bank would assume a position in the underlying contract in the event of exercise), then the remaining maturity of the contract is the time until the final settlement date of the underlying derivative contract. For a derivative contract that is structured such that any outstanding exposure is settled on specified dates and the terms are reset so that the fair value of the contract is zero, the remaining maturity equals the time until the next reset date.
12. l.Securities financing transactions (SFTs) are transactions such as repurchase agreements, reverse repurchase agreements, security lending and borrowing, and margin lending transactions, where the value of the transactions depends on market valuations and the transactions are often subject to margin agreements.
13. m.Variation margin (VM) means margin in the form of cash or financial assets exchanged on a periodic basis between counterparties to recognize changes in contract value due to changes in market factors.
14. n.A walkaway clause is a provision that permits a non-defaulting counterparty to make only limited payments or no payment at all, to the estate of a defaulter, even if the defaulter is a net creditor.