4.2.2.2 Generally Applicable Criteria for Eligible HQLA

1. Unencumbered

   The application looks at the encumbrance status and includes only those assets in the stock which are unencumbered. If partially encumbered, then the portion of the asset that is unencumbered is considered as HQLA and included in the stock.

2. Segregated Client Pool Securities

   A segregated client pool security held by the bank or the cash received as part of a repo transaction where the underlying is a client pool security are not considered eligible HQLA and therefore excluded from the stock.

3. Maintenance of Eligible HQLA in the United States

   A bank is generally expected to maintain an amount and type of eligible HQLA in the United States that is sufficient to meet its total net cash outflow amount in the United States.

4. Exclusion of Certain Re-hypothecated Assets

   Any asset that a bank receives under a re-hypothecation right is not considered eligible HQLA if the counterparty or beneficial owner of the asset has a contractual right to withdraw the asset without an obligation to pay more than the minimum remuneration at any time within 30 calendar days. This exclusion also applies to any asset generated from another asset obtained under such a re-hypothecation right.

5. Exclusion of Assets Designated to Cover Operational Costs

   Bank’s own assets such as deposits held at other depository institutions for the purpose of meeting its operational costs such as wages, facility maintenance and so on are excluded from HQLA as such assets are not available to cover the liquidity needs that arise during stress situations. The application assesses the operational deposit criteria for such assets and excludes them from the stock of HQLA.