1.An estimate isshall be sufficiently conservative whenwhere either of the following conditions is met:
(a)where the investment mandate of the index specifies that aan capitalown funds instrument of a financial sector entity or an eligible liabilities instrument of an institution which is part of the index cannot exceed a maximum percentage of the index, the institution uses that percentage as an estimate for the value of the holdings that is deducted from its Common Equity Tier 1, Additional Tier 11, or Tier 2 items, as applicable in accordance with Paragraph 2 of Article 1717(2) or from Common Equity Tier 1 capitalitems in situations where the institution cannot determine the precise nature of the holding;holding, or, for an institution subject to the requirements of Article 92a of Regulation (EU) No 575/2013, its eligible liabilities items;
(b)where the institution is unable to determine the maximum percentage referred to in point (a) and where the index, as evidenced by its investment mandate or other relevant information, includes capitalown funds instruments of financial sector entities,entities or eligible liabilities instruments of institutions, the institution deducts the full amount of the index holdings from its Common Equity Tier 1, Additional Tier 11, or Tier 2 items, as applicable in accordance with Paragraph 2 of Article 1717(2) or from Common Equity Tier 1 capitalitems in situations where the institution cannot determine the precise nature of the holding.holding or, for an institution subject to the requirements of Article 92a of Regulation (EU) No 575/2013, its eligible liabilities items.
2.For the purposes of paragraph 1, the following shall apply:
(a)an indirect holding arising from an index holding comprises the proportion of the index invested in the Common Equity Tier 1, Additional Tier 1 and Tier 2 instruments of financial sector entities and in eligible liabilities instruments of institutions included in the index;
(b)an index includes, but is not limited to,includes index funds, equity or bond indices or any other scheme where the underlying instrument is aan capitalown funds instrument issued by a financial sector entity.entity or an eligible liabilities instrument issued by an institution.