purpose


The purpose property describes the reason behind the creation or usage of the financial product as seen from the point of view of the financial institution.

Account

deposit

The deposit enum value refers to a retail deposit defined in accordance with Article 411 of the CRR:

A liability to a natural person or to an SME, where the natural person or the SME would qualify for the retail exposure class under the Standardised or IRB approaches for credit risk, or a liability to a company which is eligible for the treatment set out in Article 153(4) and where the aggregate deposits by all such enterprises on a group basis do not exceed EUR 1 million.

ci_service

The ci_service enum value refers to accounts covered by central institution services or held within a cooperative network.

Opening paragraph 12 of the LCR states that liquidity calculations should take into account:

centralised management of liquidity in cooperative and institutional protection scheme networks where the central institution or body plays a role akin to a central bank because the members of the network do not typically have direct access to the latter. Appropriate rules should, therefore, recognise as liquid assets the sight deposits which are made by the members of the network with the central institution and other liquidity funding available to those from the central institution.

Assets placed as a ci_service should be considered unencumbered inaccordance with Artcle 7.2(a) of the LCR:

assets included in a pool which are available for immediate use as collateral to obtain additional funding under committed but not yet funded credit lines available to the credit institution. This shall include assets placed by a credit institution with the central institution in a cooperative network or institutional protection scheme.

collateral

The collateral enum type identifies an account or deposit received as collateral and hence, not classified as a liability for the purposes of Article 27 and 29 of the LCR. Collateral held in an account should have a corresponding id in the collateral schema.

operational

The clearing enum value indicates that the account or deposit is being maintained for clearing, settlement, custody or cash management services in the context of an operational relationship and hence can be treated as a very short term exposure.

Clearing and comparable services from the CRR Article 422.4:

Clearing, custody or cash management or other comparable services referred to in points (a) and (d) of paragraph 3 only covers such services to the extent that they are rendered in the context of an established relationship on which the depositor has substantial dependency. They shall not merely consist in correspondent banking or prime brokerage services and the institution shall have evidence that the client is unable to withdraw amounts legally due over a 30 day horizon without compromising its operational functioning.

Operational deposit from the CRR Article 27.6:

  1. In order to identify the deposits referred to in point (c) of paragraph 1, a credit institution shall consider that there is an established operational relationship with a non-financial customer, excluding term deposits, savings deposits and brokered deposits, where all of the following criteria are met: (a) the remuneration of the account is priced at least 5 basis points below the prevailing rate for wholesale deposits with comparable characteristics, but need not be negative; (b) the deposit is held in specifically designated accounts and priced without creating economic incentives for the depositor to maintain funds in the deposit in excess of what is needed for the operational relationship; (c) material transactions are credited and debited on a frequent basis on the account considered; (d) one of the following criteria is met: (i) the relationship with the depositor has existed for at least 24 months; (ii) the deposit is used for a minimum of 2 active services. These services may include direct or indirect access to national or international payment services, security trading or depository services. Only that part of the deposit which is necessary to make use of the service of which the deposit is a by-product shall be treated as an operational deposit. The excess shall be treated as non-operational.

custody

As opposed to short-term definition within operational, custody here refers to the long-term custody of financial assets such as those held for safekeeping by a custodian bank.

prime_brokerage

Describes an account held for prime brokerage reasons but not including those contained above for operational reasons. These accounts are used for prime brokerage service transactions which are in essence investment activities including securities lending, leveraged trade executions and cash management, among other things.

other

The other enum value can be used when none of the other enum values apply or the value is unknown.

Derivative

reference

Use this enumeration value to refer to derivatives which are underlyings of other derivative positions (e.g. swaptions). In the context of CRR Article 329, a reference derivative would be the underlying swap of a swaption.

Derivative Cash Flow

reference

Use this enumeration value to refer to derivative cash flows which are calculated in order to decompose derivatives in combinations of long and short flows. See CRR Articles 328 to 331.

Loan

house_purchase

The house_purchase value indicates that the purpose of the loan is for the purchase of residential property for occupation by the borrower.

first_time_buyer

The first_time_buyer value is a term used in the British and Irish property markets and defined in the Bank of England's Mortgage Lending & Administration (MLAR) Definitions section E6.1/2 It is a sub-category of a house_purchase where "the tenure of the main borrower immediately before this advance was not owner-occupier."

bridging_loan

A bridging_loan is a short-term financing option used typically used for property owners to finance the period between buying a new property and selling an old one when the timing of the two does not match. It can also be used by property developers or investors who value speed over cost.

buy_to_let

The buy_to_let value is a term used in the British property market where the borrower is purchasing the property with a view of renting it out on a commercial basis to an unrelated third party. See MLAR Definitions section E6.2.

internal_hedge

From CRR definitions (96):

internal hedge means a position that materially offsets the component risk elements between a trading book and a non-trading book position or sets of positions;

ips

From CRR Article 113(7):

An institutional protection scheme is a contractual or statutory liability arrangement which protects those institutions and in particular ensures their liquidty and solvency where necessary;

lifetime_mortgage

A lifetime_mortgage is a very specific kind of British mortgage contract and is defined in the FCA Handbook. It is geared towards customers of a certain age in order to release equity and typically repayment occurs at the time of the customers death when the property is sold;

promotional_loan

As outlined in LCR Article 31(9), a promotional_loan

shall be available only to persons who are not financial customers on a non-competitive, not for profit basis in order to promote public policy objectives of the Union or that Member State's central or regional government. It shall only be possible to draw on such facilities following the reasonably expected demand for a promotional loan and up to the amount of such demand provided there is a subsequent reporting on the use of the funds distributed;

remortgage

The remortgage value indicates a re-mortgage or refinancing of an existing property by an existing customer of the firm who had a loan with a house_purchase purpose. Note that this does not include re-mortgages of first_time_buyer and buy_to_let loans which should retain their respective purposes in the event of a re-mortgage. See MLAR Definitions section E6.4/5.

speculative_property

From CRR definitions (79):

speculative immovable property financing‧ means loans for the purposes of the acquisition of or development or construction on land in relation to immovable property, or of and in relation to such property, with the intention of reselling for profit;

remortgage_other

The remortgage_other value indicates a re-mortgage by a new customer who is refinancing a loan from another lender.

repo / reverse_repo

From CRR definitions (82):

repurchase agreement and reverse repurchase agreement mean any agreement in which an institution or its counterparty transfers securities or commodities or guaranteed rights relating to either of the following: (a) title to securities or commodities where that guarantee is issued by a recognised exchange which holds the rights to the securities or commodities and the agreement does not allow an institution to transfer or pledge a particular security or commodity to more than one counterparty at one time, subject to a commitment to repurchase them; (b) substituted securities or commodities of the same description at a specified price on a future date specified, or to be specified, by the transferor, being a repurchase agreement for the institution selling the securities or commodities and a reverse repurchase agreement for the institution buying them;

other

The other enum value can be used when none of the other enum values apply or the value is unknown.

Security

derivative_collateral

Defined in accordance with Article 30(1) of the LCR regulation:

"collateral posted for contracts listed in Annex II of Regulation (EU) No. 575/2013 and credit derivatives".

reference

Use this enumeration value to refer to securities which are underlyings of derivative positions (e.g. bond futures). In the context of CRR Article 328, a reference security would be the underlying bond of a bond future position.


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