ANNEX IIU.K. DEFINITIONS
PART 1U.K. Definitions of instrument categories
1.This table provides a detailed standard description of the instrument categories, which national central banks (NCBs) transpose into national categories in accordance with this Regulation. The table does not constitute a list of individual financial instruments and the descriptions are not exhaustive. The definitions refer to the European system of national and regional accounts in the European Union (hereinafter the ‘ESA 2010’), laid down by Regulation (EU) No 549/2013.U.K.
2.For some of the instrument categories, maturity breakdowns are required. These refer to original maturity, i.e. maturity at issue, which is the fixed period of life of a financial instrument before which it cannot be redeemed, e.g. debt securities, or before which it can be redeemed only with some kind of penalty, e.g. some types of deposits.U.K.
3.Financial claims can be distinguished by whether they are negotiable or not. A claim is negotiable if its ownership is readily capable of being transferred from one unit to another by delivery or endorsement or of being offset in the case financial derivatives. While any financial instrument can be potentially traded, negotiable instruments are designed to be traded on an organised exchange or ‘over-the-counter’, although actual trading is not a necessary condition for negotiability.U.K.
4.All financial assets and liabilities must be reported on a gross basis, i.e. financial assets must not be reported net of financial liabilities.U.K.
Table A
Definitions of instrument categories of the assets and liabilities of FVCs
PART 2U.K. Definitions of sectors
The ESA 2010 provides the standard for sector classification. This table provides a detailed standard description of sectors which NCBs transpose into national categories in accordance with this Regulation. Counterparties located in the territory of the Member States whose currency is the euro are identified according to their sector in accordance with the lists maintained by the European Central Bank (ECB) for statistical purposes, and the guidance for the statistical classification of counterparties provided in the ECB’s ‘Monetary financial institutions and markets statistics sector manual: Guidance for the statistical classification of customers’. Credit institutions located outside Member States whose currency is the euro are referred to as ‘banks’ rather than as MFIs. Similarly, the term ‘non-MFI’ refers only to the euro area. For Member States whose currency is not the euro the term ‘non-banks’ is used.
Table B
Definitions of sectors
PART 3U.K. Definition of financial transactions
Financial transactions, in accordance with the ESA 2010, are defined as the net acquisition of financial assets or the net incurrence of liabilities for each type of financial instrument, i.e. the sum of all financial transactions that occur during the relevant reporting period. A financial transaction between institutional units is a simultaneous creation or liquidation of a financial asset and the counterpart liability, or a change in ownership of a financial asset, or an assumption of a liability. Financial transactions are recorded at transaction values, that is, the values in national currency at which the financial assets and/or liabilities involved are created, liquidated, exchanged or assumed between institutional units, on the basis of commercial considerations. Write-offs/write-downs and valuation changes do not represent financial transactions.
PART 4U.K. Definition of write-offs/write-downs
Write-offs/write-downs are defined as the impact of changes in the value of loans recorded on the balance sheet that are caused by the application of write-offs/write-downs of loans. Write-offs/write-downs recognised at the time a loan is sold or transferred to a third party are also included, where identifiable. Write-offs refer to events where the loan is considered to be a worthless asset and is removed from the balance sheet. Write-downs refer to events where it is deemed that the loan will not be fully recovered, and the value of the loan is reduced in the balance sheet.