For the purposes of Part Three, Title II, the following definitions shall apply:
(1)
‘exposure’ means an asset or off-balance sheet item;
(2)
‘loss’ means economic loss, including material discount effects, and material direct and indirect costs associated with collecting on the instrument;
(3)
‘expected loss’ or ‘EL’ means the ratio of the amount expected to be lost on an exposure from a potential default of a counterparty or dilution over a one-year period to the amount outstanding at default.