8. Permanent partial use

Where use is made of the provisions of the CRD on the permanent partial use, the rationale for this should be carefully documented and analysed to show it is not intended to deliver a charge that is less conservative than if all positions were within the specific risk VaR and the IRC model.

Permanent partial use of the IRC should not apply to sovereign bonds and derivative products referencing sovereign bonds since – from a modelling point of view - the inclusion of these positions in the specific risk model and consequently in the IRC framework is not considered to be particularly challenging.