1. A SIPS operator shall only accept the following assets as collateral:
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(b)
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assets with low credit, liquidity and market risks, i.e. assets for which the SIPS operator can demonstrate to the competent authority based on an adequate internal assessment that they meet all of the following conditions:
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(i)
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they have been issued by an issuer with low credit risk;
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(ii)
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they are freely transferable without any legal constraint or third-party claims;
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(iii)
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they are denominated in a currency the risk of which is managed by the SIPS operator;
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(iv)
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they have reliable price data published on a regular basis;
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(v)
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they are not otherwise subject to significant wrong-way risk;
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(vi)
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they are not issued by the participant providing the collateral or an entity that is part of the same group as that participant, except in the case of a covered bond and only where the assets in the cover pool are appropriately segregated within a robust legal framework and satisfy the requirements set out in points (i) to (v).
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In performing the internal assessment of points (i) to (vi), the SIPS operator shall define, document and apply an objective methodology.