63. In order for an internal or external ratings of a third party to be incorporated into a PD …

In order for an internal or external ratings of a third party to be incorporated into a PD model, institutions should ensure all of the following:

(a) that the rating of a third party fulfils all the requirements for relevant risk drivers set out in section 5.2.2;
(b) that other relevant obligor and transaction risk characteristics are properly reflected in the model in accordance with Articles 170(1)(a) and 170(3)(a) of Regulation (EU) No 575/2013, and that no material biases are introduced by a high weighting of the internal or external rating information;
(c) that there is no double counting of effects of any relations to third parties.

1. Overview

Summary	Regulation

Requirements
Source	Requirement

Standards
Source	Requirement

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