Interpretation of the appropriate estimator for Credit Conversion Factors (CCF)

Is it possible to interpret the concept of “default weighted average from all observed defaults” as described for realised CCFs in article 182 of Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 as “the arithmetic average of the yearly averages”?

Under article 182 1 (a) of Regulation (EU) 529/2014 ‘institutions shall estimate conversion factors by facility grade or pool on the basis of the average realised conversion factors by facility grade or pool using the default weighted average resulting from all observed defaults within the data sources’. This is understood as a simple average of the realised CCF associated to each default. In other words, each default will count as ‘one’ in the average, irrespective of the time period in which the default occurred. However, the “average realised CCF” could be computed as the arithmetic average of the yearly averages of realised CCFs in a given period. In such a way individual defaults belonging to years where there are more defaults will have a lower influence in the average, as each year will count the same.