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(Cap 155, section 81(3)) [1 August 1991] (L.N. 305 of 1991) Cap 155C para 1 Citation This notice may be cited as the Specification of Factors (Financial Exposure of Authorized Institution) Notice. (Enacted 1991) Cap 155C para 2 Specified factors For the purposes of section 81(2)(c) of the Ordinance, the factors in the third column of the Schedule are specified for the items referred to in Table B of the Third Schedule to the Ordinance that are described in the second column of the Schedule. (Enacted 1991) Cap 155C SCHEDULE [paragraph 2] OFF-BALANCE SHEET ITEMS Item in Table B of the Third Schedule Nature of item Credit conversion factor 1. Direct credit substitutes Irrevocable off-balance sheet obligations which carry the same credit risk as a direct extension of credit. This includes guarantees, the confirming of letters of credit, standby letters of credit serving as financial guarantees for loans, securities and acceptances (including endorsements with the character of acceptances) other than acceptances included in item 3. 100% 2. Transaction-related contingencies Contingent liabilities which involve an irrevocable obligation of the authorized institution to pay a beneficiary when a customer fails to perform some contractual, non-financial obligation. This includes performance bonds, bid bonds, warranties and standby letters of credit related to a particular transaction. 100% 3. Trade-related contingencies Contingent liabilities which relate to trade related obligations. This includes letters of credit, acceptances on trade bills, shipping guarantees and any other trade related contingencies. 100% 4. Sale and repurchase agreements Arrangement whereby the authorized institution sells a loan, security or other asset to another person with a commitment to repurchase the asset at an agreed price on an agreed future date. 100% 5. Assets sales or other transactions with recourse Assets sales where the holder of the asset is entitled to put the asset back to the authorized institution within an agreed period or should the value or credit quality of the asset deteriorate. 100% 6. Forward asset purchases Commitment to purchase a loan, security or other asset, including under a put option granted by the authorized institution to another party, at specified future date on pre-arranged terms. 100% 7. Partly paid-up shares and securities (held by the authorized institution) The unpaid portion of shares or securities which the issuer of such shares or securities may call for at a future date. 100% 8. Forward forward deposits placed Any agreement between the authorized institution and another party whereby the institution will place a deposit at an agreed rate of interest with that party at some predetermined future date. 100% 9. Note issuance and revolving underwriting facilities Arrangements whereby a borrower may draw down funds up to a prescribed limit over a predefined period by making repeated note issues to the market, and where, should the issue prove unable to be placed in the market, the unplaced amount is to be taken up or funds made available by the underwriter of the facility. 100% 10. Other commitments with an original maturity of under 1 year or which may be cancelled at any time unconditionally by the authorized institution. 100% 11. Other commitments with an original maturity of 1 year or over. 100% (L.N. 365 of 1991)