CERTYNEX IFRS ACADEMY

Cantelane bank entered into two derivatives with the same counterparty, covered by a netting and collateral agreement that limits the exposure to that counterparty's credit risk (case data). How does it assess that credit risk in the measurement of the net position?

On the single derivative of greater value, the other being ignored.

On the gross amount of each derivative, ignoring the agreement.

On the net position, taking into account the netting and collateral agreements that limit the exposure.

On the net position, taking the agreement into account without assessing whether it would be enforceable in the event of default.