12 CFR § 1240.51 - Introduction and exposure measurement.
---
identifier: "/us/cfr/t12/s1240.51"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "12 CFR § 1240.51 - Introduction and exposure measurement."
title_number: 12
title_name: "Banks and Banking"
section_number: "1240.51"
section_name: "Introduction and exposure measurement."
chapter_name: "FEDERAL HOUSING FINANCE AGENCY"
subchapter_number: "C"
subchapter_name: "ENTERPRISES"
part_number: "1240"
part_name: "CAPITAL ADEQUACY OF ENTERPRISES"
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "12 U.S.C. 4511, 4513, 4513b, 4514, 4515, 4517, 4526, 4611-4612, 4631-36."
regulatory_source: "85 FR 82198, Dec. 17, 2020, unless otherwise noted."
cfr_part: "1240"
---
# 1240.51 Introduction and exposure measurement.
(a) *General.* (1) To calculate its risk-weighted asset amounts for equity exposures, an Enterprise must use the Simple Risk-Weight Approach (SRWA) provided in § 1240.52.
(2) An Enterprise must treat an investment in a separate account (as defined in § 1240.2) as if it were an equity exposure to an investment fund.
(b) *Adjusted carrying value.* For purposes of §§ 1240.51 and 1240.52, the adjusted carrying value of an equity exposure is:
(1) For the on-balance sheet component of an equity exposure, the Enterprise's carrying value of the exposure;
(2) [Reserved]
(3) For the off-balance sheet component of an equity exposure that is not an equity commitment, the effective notional principal amount of the exposure, the size of which is equivalent to a hypothetical on-balance sheet position in the underlying equity instrument that would evidence the same change in fair value (measured in dollars) given a small change in the price of the underlying equity instrument, minus the adjusted carrying value of the on-balance sheet component of the exposure as calculated in paragraph (b)(1) of this section; and
(4) For a commitment to acquire an equity exposure (an equity commitment), the effective notional principal amount of the exposure is multiplied by the following conversion factors (CFs):
(i) Conditional equity commitments with an original maturity of one year or less receive a CF of 20 percent.
(ii) Conditional equity commitments with an original maturity of over one year receive a CF of 50 percent.
(iii) Unconditional equity commitments receive a CF of 100 percent.