Division 5 The calculation of haircuts resulting from the application of point (c) of paragraph 1 shall meet all of the following conditions:

a counterparty shall use the volatility estimates in the day-to-day risk management process including in relation to its exposure limits;

where the liquidation period used by a counterparty is longer than that referred to in point (b) of paragraph 1 for the type of OTC derivative contract in question, that counterparty shall increase its haircuts in accordance with the square root of time formula referred to in point (c) of that paragraph.