Institutions shall calculate the risk-weighted exposure amounts for dilution risk of purchased corporate and retail receivables in accordance with the formula set out in Article 153(1).

Institutions shall determine the input parameters PD and LGD in accordance with Section 4.

Institutions shall determine the exposure value in accordance with Section 5.

For the purposes of this Article, the value of M is 1 year.

The competent authorities shall exempt an institution from calculating and recognising risk-weighted exposure amounts for dilution risk of a type of exposures caused by purchased corporate or retail receivables where the institution has demonstrated to the satisfaction of the competent authority that dilution risk for that institution is immaterial for this type of exposures.