Rating grades in Annex I of the draft ITS on benchmarking

As highlighted in the instructions of column 060 of C 102.00 of Annex IV to Regulation (EU) 2016/2070 (ITS on Supervisory Benchmarking), it is neither intended nor desirable to have a supervisory master scale. Therefore, if the reporting institution applies a unique rating system or is able to report according to an internal master scale, this scale shall be used (Rating 1, Rating 2, Rating 3…). This approach is identical to case 1 as described in the question. If different rating systems apply, these rating systems shall be merged and ordered according to the following criteria: obligor grades of the different rating systems shall be pooled and ordered from the lower PD assigned to each obligor grade to the higher; where the institution uses a large number of grades or pools, it may agree with the competent authorities to report a reduced number of grades or pools. The whole range of proposed rating grades doesn’t have to be used. However, as stated in paragraph 4 of Annex IV to the ITS on Supervisory Benchmarking, information on the PD shall be reported for the entire rating scale (of the institution), even if the institution has no exposure for each rating grade.