# Commission Implementing Regulation (EU) No 680/2014 of 16 April 2014 laying down implementing technical standards with regard to supervisory reporting of institutions according to Regulation (EU) No 575/2013 of the European Parliament and of the Council (Text with EEA relevance), Division 58: In order to ensure a consistent categorisation of exposures into the different exposure classes referred to in Article 112 CRR the following sequential approach shall be applied:

Extent: E+W+S+N.I.

(a) In a first step, the Original exposure pre-conversion factors shall be classified into the corresponding (original) exposure class referred to in Article 112 CRR, without prejudice to the specific treatment (risk weight) that each specific exposure shall receive within the assigned exposure class.
(b) In a second step the exposures may be redistributed to other exposure classes due to the application of credit risk mitigation (CRM) techniques with substitution effects on the exposure (e.g. guarantees, credit derivatives, financial collateral simple method) via inflows and outflows.

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Source: https://www.legislation.gov.uk/eur/2014/680/annex/II/part/2/division/3/division/3.2/division/3.2.3/division/58 (the official version)
Page: https://openlegislation.uk/eu-regulation-2014-680/annex-II/part-2/division-3/division-3.2/division-3.2.3/division-58
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.