Large Exposure Exemption Form
Rules governing large exposures have been introduced via Part 4 of Regulations
575/2013 of the European Parliament and of the Council of 26 June 2013 on
Prudential Requirements for credit institutions and investment firms and
amending Regulation (EU) No 648/2012.
This form is only to be completed by a firm that require a large exposure
exemption, which is not already provided for in Article 400 of the Regulations.
Firm name:
Date:
Signed by
Name
Return this Large Exposure Exemption Form to:
Financial Services Commission
PO Box 940
Suite 3, Ground Floor
Atlantic Suites
Europort Avenue
Gibraltar
Position
For Financial Services Commission use :
Date Received :
Checked By :
Follow up required :
Version 2.2
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Section A - Institutional Exemptions
The firm shall not incur an exposure, after taking into account the effect of the credit risk
mitigation in accordance with articles 399 to 403, to a client or group of connected clients
the value of which exceed 25% of its own funds.
Where the client is an institution or where a group of connected clients includes one or
more institutions, that value shall not exceed 25% of the credit institution’s own funds or
EUR 150 million, whichever is the higher, provided that the sum of exposure values, after
taking into account the effect of the credit risk mitigation in accordance with articles 399
to 403, to all connected clients which are not institutions, does not exceed 25% of the
firm’s own funds.
Where the amount of EUR 150 million is higher than 25% of the firm’s own funds, the
value of the exposure, after taking into account the effect of the credit risk mitigation,
shall not exceed a reasonable limit in terms of the firm’s own funds and must be less than
100% of the firm’s capital resources.
Section A1 - Exposures exceeding 25% of own funds
Where the amount of EUR 150 million is applicable, the firm may request the
Commissioner for an exemption in order to be able to exceed the 100% limit in terms of
the credit institution’s own funds.
The firm is required to complete the section below for consideration by the
Commissioner.
A1.1
State whether the exemption is intended to apply on a solo basis only or on a
solo and consolidated basis.
A1.2
Please list the identities of the counterparty/group of counterparties that the
exemption is intended to apply to.
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A1.3
Provide details of the current and expected exposure limits for each
counterparty/group of counterparties that the exemption is intended to apply to.
Section A2 - Group exemptions
A firm which incurs exposures to its parent undertaking, to the parent’s other subsidiaries
or to its own subsidiaries, and where these companies are outside the EEA, may apply to
the Commissioner for an exemption if the firm and that undertaking and/or subsidiary are
covered by the same supervision on a consolidated basis in accordance with these Regs
or with equivalent standards in force in a non-EEA state.
The firm is required to complete the section below for consideration by the
Commissioner.
A2.1
State whether the exemption is intended to apply on a solo basis only or on a
solo and consolidated basis.
A2.2
Please list the identities of the counterparty/group of counterparties that the
exemption is intended to apply to.
A2.3
Provide details of the current and expected exposure limits for each
counterparty/group of counterparties that the exemption is intended to apply to.
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A2.4
Where the parent, the parent’s subsidiary, or its own subsidiary are not located
in an EEA state, please confirm the jurisdiction where it/they are based, name of
the regulatory authority, if there are equivalent standards in the country and
provide details of the corresponding legislation in place.
Section A3 – Secured exposures
Exposures secured by collateral in the form of cash deposits placed with the lending credit
institution or with a firm which is the parent undertaking or a subsidiary of the lending
credit institution; and exposures secured by collateral in the form of certificated of deposit
issued by the lending credit institution or by a firm which is the parent undertaking or a
subsidiary of the lending credit institution and lodged with either of them, may be exempt
subject to the satisfaction of the Commissioner.
The firm is required to complete the section below for consideration by the
Commissioner.
A3.1
Please list the identities of the counterparty/group of counterparties that the
exemption is intended to apply to.
A3.2
Provide details of the current and expected exposure limits for each
counterparty/group of counterparties that the exemption is intended to apply to.
A3.3
Please provide details of the type of collateral used per counterparty/group of
counterparties for each exposure.
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Section B – Sovereign Large Exposure Exemption
Some firms have large exposures to central governments or central banks that are not
eligible to be exempted from the basic large exposure limit of 25% because these
sovereign counterparties do not receive a 0% risk weight under the standardised
approach for credit risk.
A firm will need to apply if it wishes to exempt its exposures to these sovereign
counterparties, from the basic limit of 25%, in the form of:

Required minimum reserves held at a central bank that are denominated in the
national currency of the central bank at which the deposit is made; or

Statutory liquidity requirements held in government securities that are
denominated and funded in the national currency of the government issuing the
securities.
B1
Please state the central governments or central banks the waiver is intended to
apply to.
B2
Provide details of the current and expected exposure limits for each central
government or central bank that the waiver is intended to apply to.
B3
Provide details of what the impact on profitability would be if the firm was
unable to apply this exemption.
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Section C – Exemption to Large Exposures Position for
Performance Fees or Management Fees
Formal dispensation from the large exposure position may be requested by a firm where
an exposure is strictly in relation to performance fees or management fees due only in
respect of portfolio management services provided by the firm.
In
C1
order
to
be
eligible
for
this,
the
following
criteria
must
be
met.
Is there a time limit on the exposure of maximum 30 days? i.e. the fees due
must be paid/received within 30 days and there must be
certainty regarding
this.
C2
Does the client agreement in place permit the firm to take the fees due from the
account(s) of the client and to liquidate any positions which it needs to in order
to take said fees?
C3
Have the funds due not been irrevocably committed in any way or for any use
by the firm?
C4
Will the firm's own funds not be detrimentally affected in any way?
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C5
Does the firm have, either by physical control of the client's assets or by other
legal mechanisms, the ability to recover its fees from the client's assets, and the
client has sufficient liquid assets to cover those fees (with the cash and market
value of the assets being be at least twice that of the fee due)?
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