The Amendments To The "minimum Capital Requirements Rules"

Original Language Title: Grozījumi "Minimālo kapitāla prasību aprēķināšanas noteikumos"

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Financial and capital market Commission Regulation No 173 in Riga in 2007 December 14 (Mon. 2. No 51 p.)
The amendments to the "minimum capital requirements rules" Issued in accordance with article 35 of the law of credit institutions in the sixth and sixth article 50.8 and financial instruments market law article 121 second and eighth and sixth article 123.3 to make financial and capital market Commission of 2 May 2006, the Regulation No 60 "minimum capital requirements" the following amendments: 1. Add to paragraph 5.9. after number "5.8." by "paragraph".
2. Express 49 as follows: "49. Central counterparty – the company that legally assume the legal obligations to be secured on among Bosh between counterparties, which financial instruments are traded in one or more financial markets, becoming the buyer to every seller and the seller to every buyer."
3. Express 50 as follows: ' 50. Central bank – the central bank of any country, The European Central bank. "
4. Express 80. the first sentence of this paragraph: "80. Until 31 December 2011, the Commission may also allow other investment brokerage firms other than those referred to in paragraphs 77 and 78, not to calculate the capital requirements for operational risk in accordance with the requirements of paragraph 73.3, if such investment brokerage company for trading book positions never exceed a total of 50 million euros and the average number of employees during the financial year have not exceeded a hundred."
5. Add to paragraph 90.2.4. and 90.3.2 after the words "opt out of their execution" with the words "which is not automatically cancelled due to deterioration of the creditworthiness of the customer".
6. Express 90.4.1. point as follows: "90.4.1. for service contracts, the opening of a credit line to purchase securities, provide guarantees (guarantees), or acceptance, which the authority may unilaterally, without execution or culpably violate applicable, and without the other party's prior šēj warning to terminate or withdraw from it or they are automatically reversed the deterioration in the creditworthiness of the customer. Small exposures in the portfolio (see. 98) included credit lines may be considered as such, which the authority may unilaterally, without execution or culpably violate applicable, and without the other party's prior notice to terminate or withdraw from it or they are automatically reversed the deterioration of the creditworthiness of the customer, unless it is in violation of the consumer protection and other similar regulatory requirements; ".
7. Make 95 the following paragraphs: ' 95. If the transactions with derivatives or 94 transactions referred to in paragraph when claims against the central counterparty and such transactions under the arrangement are every day fully backed the central counterparty of all other business partners, then the following exposures to central counterparties value shall be determined in accordance with Annex 1, part 2, paragraph 33.
8. Express of 97.11 as follows: "97.11. high risk categories for exposure, i.e., risk capital investments (investments in venture capital firms and private equity investments) and hedge funds (hedge funds);".
9. Add to 121.1 points after the words "local governments" with the words "and with the national authorities."
10. Express and 148.7 points 148.6. by the following: "the participation of the company 148.6. or capital requirements institutions to which you can apply the zero degree of risk (including participation in a State-funded company or institution capital requirements against which you can apply the zero degree of risk);
the participation of the company 148.7. or institutional capital, linked to national programmes of special economic sectors, within which the authority receives significant subsidies for their investment. Such investments in fixed capital to the Government monitoring and restrictions, and the total investment value should not exceed 10 percent of the Authority's first level and second level equity totals; ".
11. paragraph 149 of the following expression: "149.148. purpose of equity securities institution category be considered significant if the total average of the previous year, excluding participation in equity resulting from the public referred to in paragraph 148.7 Pro gramm, more than 10 percent of the institution's own funds. If the investment is less than 10, above the threshold is 5 percent of the institution's own funds. "
12. To make the first sentence of paragraph 227 of the following: "227. Settlement/delivery risk is the risk to which the body is exposed to dealings with the trade portfolio debt securities, equity securities, foreign exchange and commodities, where the body of debt securities, equity securities, foreign currencies or goods or receipt respectively receive cash or pay it, but both of the parties to the transaction have not taken the settlement and delivery within five days after the billing date and body damage may occur whose size is determined by the difference between the debt securities, equity securities, foreign currencies or commodity price and the current (capital requirements calculated day) market price. "
13. To supplement the text of paragraph 236.2 as follows: "this restriction applies only to those included in the trading book referred to in paragraph 235 exposures. Not included in the trading book 235. exposures may apply the financial collateral simple method and the extended method for credit risk mitigation depending on which method is applied to the rest of the non trading book exposures; ".
14. To supplement the provisions of the following paragraph 236.1: "236.1 the counterparty credit risk and the credit risk capital requirements, exposures to recognised exchanges and recognised foreign investment brokerage firms will be treated as exposures to institutions."
15. off 303.6. point.
16. off 305.3. point "or expenses".
17. table 1, column 9: Express row 3 as follows: "mediation services to individuals or SMES (transactions with individuals or SMES that meet this provision in paragraph 98-99)";
make row 5 by the following: "Individuals or SMES (transactions with individuals or SMES that meet this provision in paragraph 98-99)".
18. off point and a 313.5. "having regard to the second sentence of paragraph 308.5 requirements".
19. Replace 343.7., and in paragraph 348.4 348.6 number "I" section with the section number "II".
20. Supplement 348.7 numbers and point before the words "Chapter 1 of part 2 of the 73.1 of requirements for the purposes of" with a number and the word "the" in section II.
21. To complement the provisions of the following paragraph 374.1: "374.1 authority shall immediately inform the Commission of each case, if the counterparty fails to comply with its obligations under the Treaty on either the assets, or repurchase agreement for the purchase of an asset with a repurchase or securities or commodities lending or borrowing contract."
22. Turn off paragraph 376.
23. Replace paragraph 378. "." with the number "103.10 97.10.".
24. Make 380. the first sentence of the following paragraph: "380. Until 2017 31 December the body authorized to impose credit risk for calculating capital requirements for IRB approach may not apply it to the authority and its subsidiaries registered in the Republic of Latvia the property of the company 31 December 2007 the existing equity securities, but the expense of such equity capital requirement by using SP."
25. Express 4. Annex 1 table column 2 row 3 by the following: "interest rate risk positions, which creates a reference debt instrument or debt instruments which, in accordance with the rules of table 3 shall apply the higher rate of weighing on 1.6 percent."
26. in annex 2: replace table 5, column 1, row 2, the words "national institutions" with the word "authorities";
Express 9.6. paragraph by the following: "9.6. Residential mortgage-secured unsecured the exposure part in another 97. category referred to in paragraph 1. ';
supplemented by 9.7 points as follows: "9.7. Exposures fully secured by mortgage on immovable property, but does not match the 9.1-9.6. requirements of paragraph, apply 100 percent risk.";
make paragraph 10.3 as follows: "10.3. Notwithstanding the requirements of paragraph 10.1, with the housing mortgage secured delayed exposures, the following risk: percent risk, if special provisions for exposures is not less than 20 per cent of the value of the exposures prior to the creation of the special reserve; percent risk for other residential mortgage backed delayed exposures. ";
Add to paragraph 13 before number and the word "part 5" with numbers and words "in Chapter 2 of title II";
make 14 the following: "14. short-term exposures to institutions and companies risk short-term exposures to nominated ECAIs short-term ratings apply to table 7 in certain risk.";
7. make the name of the table as follows:

"table 7. Institutional and commercial exposures with the nominated ECAIs short-term ratings to specific risk according to the short-term rating of credit quality grades ";
make 7. table column 1 row 1 in the following wording: "exposure to short term rating corresponding to the ECAI credit quality";
16.3.3. points to express the following: "the participation capital and 16.3.3. other interest that do not constitute a reduction in equity;".
27. Annex 3: Supplement with 1.1 points (after the title "collateral," but before point 2) by the following: "1.1 if the credit risk mitigation technique based on the authorities the right to liquidate or retain assets, then the security suitability depends on the exposure risk weighted exposure amounts and, where relevant, expected loss amounts calculated in accordance with the provisions of paragraph 88-110 (SP) or in accordance with rule 111-149 points (IRB approach). In addition to the eligibility of collateral depends on the use of the financial collateral simple method or the financial collateral extended the method set out in part 3 of this annex. In relation to repurchase transactions and securities or commodities lending or borrowing transactions, the suitability of the security also depends on whether the transaction is posted in the trading book or non-trading book. ";
supplemented by 7.1 points as follows: "If a Member State allows this 7.1 a Member State authorities do not fulfil the requirements which are equivalent to point 6.2 of this annex the requirements relating to immovable property situated in the territory of that Member State to consider it suitable for real estate collateral, the Latvian authorities may consider the following real estate suitable for real estate collateral.";
make paragraph 14.3 follows: "14.3. duration of protection or at any later time, the internal protection rating was with a probability of default (SNV), which matches or is lower than the SNV, corresponding to the credit quality of the second or higher degree according to the risk exposures of commercial companies on the basis of the provisions of paragraph 88-110;";
supplement with 18.1 points (after the heading "part 2. Minimum requirements for the recognition of credit risk mitigation "and subtitle" in Funded credit protection ") by the following: 18.1" regardless of the credit risk mitigation taken into account for the calculation of the exposure risk weighted exposure amounts and expected loss, where appropriate, the authority to continue to make the base a full credit risk exposures and can prove these claims to the Commission. Repo transactions and/or securities or commodities lending or borrowing transactions in the case on the base of exposures for the purposes of this paragraph only considers the net amount of the exposures. ";
Express 23.2. point as follows: "23.2. the authority shall carry out a real estate value monitoring: at least once a year in commercial property and housing every three years. If significant changes have taken place in the market, such verification shall be carried out more frequently. Statistical methods can be used in real estate values and monitoring to identify the assets you want to revalue. Property assessment review (review) the independent evaluators, if the authorities have information to show that the value of the property can be reduced considerably relative to the overall market prices. Loans that exceed 3 million euro or equivalent in another currency, or 5 percent of the institution's own funds, the real estate valuation report by an independent valuer at least once every three years. The independent assessor is someone who has the appropriate license or certificate and which is independent of the process in which the decision on granting the credit is taken. ";
replace the words "paragraph 40.11 impairment" with the words "decrease in recoverable value";
Supplement to 79.1 points by the following: "where a Member State 79.1 laws provide for the possibility to apply the requirements of this annex, which is equivalent to 78 and 79, paragraph repurchase transactions or securities lending or borrowing with securities that are issued by the Government of the Latvian authorities may also apply this approach to the transactions mentioned.";
to add a title and 81.1 points as follows: "the credit risk associated With debt securities with credit-related investments 81.1 debt can be considered a cash pledge.";
to add a title and 81.2 points (before the heading "umbrella contracts covering repurchase transactions/securities or commodities lending or borrowing and/or other capital market transactions") by the following: "the mutual claims of balance sheet items included in the loans and deposits 81.2 institution-vendors, subject to balance sheet items including mutual claims, are considered cash pledge.";
make the first sentence of paragraph 83 in the following wording: "83. Authority to calculate the adjusted fully exposure value (E *) this annex referred to in paragraph 82 of the exposures can be used either to monitor the volatility adjustments, or the same rating volatility adjustments in accordance with this annex, paragraph 56-77.";
replace the figure "118 paragraph 87." with the number "119.";
126. paragraph be supplemented by the words "three months" with the words and figures " short-term exposures, which are identified in accordance with the provisions of annex 6.50. ";
make 138, second sentence the following wording: "in such cases, use the methodology set out in paragraph 137 of the first event of default credit derivatives, appropriate adaptation to the n the default products."
28. Replace paragraph 67 of annex 4, the word "when" with the word "If".
29. in annex 6, paragraph 4, replace the words "in the SVZ are direct exposures to the protection set called" SNZ "SVZ is direct exposures to the protection drawer set" SNZ;
make the third sentence of paragraph 9.2 of the following wording: "If amending protected exposure risk weighted value and expected loss (the-PZ) amount multiplied by 12.5, is greater than the protection provided for the payment of the credit derivative multiplied by 12.5, then protected the basket of exposures to risk-weighted value is the last product of the result (the amount of the safeguard duty, multiplied by 12.5.)"
30. Express in annex 7, paragraph 1.2.4 as follows: "1.2.4. the institutions governing board submit trading book positions reporting procedures, which are institutions risk management an integral part of the process;".
Financial and capital market Commission President When the U.