Rate of Equity

The value of each fictitious equity item shall be the amount of equity on which the instruments are based times the fair value of the equity, unless otherwise stated. An addition to a securities account shall be accounted for as a fictitious item in the equity capital used. In the case where a mandatory bond is incorporated in the PRR computation of BIPRU 7.3.3 (see BIPRU 7.3.3R table): the PRR of the company's equity must be adapted by: deducting the actual value of a gain that the company would make on conversion into equity (subject to a ceiling on the amount of the PRR on the fictitious item on which the mandatory bond is based).

Fictitious items produced according to BIPRU 7.3.15R have the following values: If more than one fictitious item is produced, each one has a value reflecting the respective equity or country's share in the overall fair value of the shares on which the contracts are based. An equity arm of an equity swing is to be considered as a component of the equity, share bucket or share index on which it is based, i.e. brief, when the company has entered into a contractual agreement to obtain a reduction and to make a payment for an appreciation in the equity or share index on which it is based.

Except in accordance with this regulation, when calculating the net exposure in any equity, an entity shall not disclose net link and link and debit exposures. A company may hold long and short net exposures in the same equity capital provided that (3) above applies. If and only if they are negotiable with each other, two shares are the same.

Long- and shortterm exposures to different instalments of the same equity may be accounted for as in the same equity for the purposes of (1), whereby: the instalments become negotiable with each other within 180 trading day and thereafter the equity of one instalment may be settled in the other instalment.

BIPRU 7.3.40R requires that the following requirements are fulfilled in order for a company to apply BIPRU 7.3.40R's two approach: at least four sovereign portfolio assets are covered (i.e. n 4); only sovereign portfolio assets for OECD, Hong Kong or Singapore full members are covered; the overall net value of the sovereign portfolio assets covered is zero, i.e.: