1.   A verifiable price shall be considered representative of a risk factor as of its observation date where all of the following conditions are met:

(a)	there is a close relationship between the risk factor and the verifiable price;

(b)	the institution has specified a conceptually sound methodology to extract the value of the risk factor from the value of the verifiable price.

For the purposes of point (b), any input data or risk factor used in the methodology other than the verifiable price shall be based on objective data.

2.   Any verifiable price may be counted as an observation for the purposes of Article 1 for all of the risk factors for which it is representative in accordance with paragraph 1.

3.   Where an institution uses a systematic credit or equity risk factor to capture market-wide movements for given attributes of a pool of issuers, including the country, region or sector of those issuers, verifiable prices of market indices or instruments of individual issuers shall be considered to be representative for that systematic risk factor only where they share the same attributes as that systematic risk factor.