Use of netting

1. For Regulatory Capital purposes, an ADI may only net the following types of transactions:
   1. on-balance sheet loans and deposits;
   2. SFTs; and
   3. OTC derivative transactions (across both the banking and trading books) with a single counterparty. This may include netting across different types of derivatives, but not across derivatives and SFTs.
2. An ADI may only net internal transactions between the banking book and trading book if:
   1. the netted transactions are marked-to-market daily, where applicable;[28] and
   2. any collateralised instruments used in the transactions comply with the criteria for eligible collateral in the banking book as detailed in Attachment G to this Prudential Standard.