7.1 Only the following credit risk mitigation techniques are considered eligible for the purposes of the large exposure framework:

7.1.1 Unfunded credit protection meeting the minimum requirements and eligibility criteria for the recognition of unfunded credit protection under the standardized approach; and

7.1.2 Financial collateral qualifying as eligible financial collateral under the standardized approach.

7.2 Other forms of collateral that are only eligible under the internal-ratings based approach are not eligible to reduce exposure values for the purposes of the large exposure framework.

7.3 A Bank must recognize eligible credit risk mitigation techniques in the calculation of an exposure whenever it has used this technique to calculate the risk-based capital requirements, provided the technique also meets the conditions for recognition under the large exposures framework.

7.4 Hedges with maturity mismatches are recognized in accordance with the risk-based capital framework.

7.5 In case of a maturity mismatch in respect of credit risk mitigants that are recognised in the risk-based capital requirements, the adjustment of the credit protection to calculate the large exposure is determined using the same approach as in the risk-based capital requirements.

7.6 Where legally enforceable netting arrangements are in place for loans and deposits, the exposure values for large exposures purposes may be calculated according to the same calculation the Bank uses for capital requirements purposes.