30Single entity limit

30 Single entity limit

(1) The value of a holding for the purpose of this section and sections 31 and 33 is the higher of: (a) the amount of the holding after considering any reduction in risk due to offsetting exposures; and (b) the value of the holding disregarding the offsetting effects of derivatives. (2) Subject to subsection (3) and section 33, no more than 5% of the value of the assets of a passport fund may be held in assets or arrangements that: (a) relate to the same entity, that is not an entity that: (i) is an assessed central clearing party; or (ii) is subject to prudential supervision by a financial supervisory authority in its place of incorporation which is, in the written opinion of the home regulator for the passport fund, generally compliant with the guidelines of the Basel Committee on Banking Supervision in an economy where the counterparty has a principal place of business and in the reasonable opinion of the operator is of low risk; and (b) are of any one or more of the following types: (i) transferable securities other than: (A) interests in financial asset regulated CISs; and (B) risk‑assessed government securities; (ii) money market instruments other than risk‑assessed government securities; (iii) derivatives; (iv) securities lending arrangements. (3) Subject to section 33, the single entity limit set out in subsection (2) may be raised to 10% in relation to assets or arrangements that: (a) have been assessed by the operator as having an acceptable risk; or (b) having considered a written opinion of a credit rating agency that is regulated in providing credit ratings in an IOSCO jurisdiction and any other information of which it is aware under its risk assessment and risk management procedures, the operator has no reason to doubt have an acceptable risk; or (c) excluding assets and arrangements referred to in paragraph (a) or (b) do not, in aggregate, exceed 40% of the value of the assets of the passport fund. (4) Subject to section 33, no more than 15% of the value of the assets of a passport fund may be held in assets or arrangements that: (a) relate to the same entity that is subject to prudential supervision by a financial supervisory authority in its place of incorporation which is, in the written opinion of the home regulator for the passport fund, generally compliant with the guidelines of the Basel Committee on Banking Supervision in an economy where the counterparty has a principal place of business and in the reasonable opinion of the operator is of low risk; and (b) are of any one or more of the types mentioned in paragraph (2)(b). (5) Subject to section 33, no more than 20% may be held in assets that: (a) relate to the same entity other than an assessed central clearing party; and (b) are of any one or more of the following types: (i) the types mentioned in paragraph (2)(b); (ii) deposits. (6) The limits under subsections (2) and (5) do not apply to deposits funded from: (a) money received from the issue or sale of interests in the passport fund before the commencement of investment by the passport fund; or (b) liquidation of investments in the process of winding up a passport fund, where the operator reasonably believes that complying with any of those subsections would not be in the interests of the members of the passport fund; or (c) money received from sales of assets of a passport fund to meet the redemption requests, where the operator reasonably believes that complying with any of those subsections would not be in the interests of the members of the passport fund. (7) No more than 35% of the value of the assets of a passport fund may be held in assets that are risk‑assessed government securities relating to the same government entity. (8) For this section, an asset or arrangement relates to an entity if the asset is of a type listed in the following table and has the connection with the entity shown: