Sources for external classification that is commonly used in the market for grouping issuers by sector, for the purpose of CRR Article 325ah.

Can lists produced by competent authorities be also seen as meeting the requirement in Article 325ah(2.) (e.g. commonly used market classification)?

For credit risk purposes, Article 115 (2) and Article 116 (4) of CRR allow certain regional governments and local authorities (RGLAs) and public sector entities (PSEs) to be risk weighted like exposures to their central government (CGs). To supplement these 2 articles the EBA publishes lists of such entities. These 2 articles allow better credit risk weights for certain RGLAs and PSEs (if listed on the relevant EBA published lists), while keeping them within their respective exposure class and not show them under a different exposure class (e.g.: central government). In this respect EBA Q&A 2017_3603 is useful. With respect to assigning risk weights for credit spread risk for non-securitisations, the requirement in Article 325ah is to rely on a commonly used market classification, which translates into the need to use economic sector categorization provided by external vendors that are then mapped to the buckets provided in Table 4 of Article 325ah.1. From this perspective, if the entities on the above mentioned EBA published lists have risk characteristics such as credit spreads, which do not significantly deviate from the credit spread of the central government, then these lists, if considered as commonly used in the market, could also be used for the purpose of Article 325ah.  Nonetheless, following this logic it would mean that certain RGLAs, PSEs or event FSEs (state owned banks) could actually be mapped to bucket 1, as per Table 4 in Article 325ah.1 and thus receive 0.5% risk weight (RW), instead of the RGLA/PSE sector categorisation (buckets 3 or 12), which require a RW of 1% or 4% or even instead of the FSE sector categorisation (buckets 4 or 13), which require a RW of 5% or 12%, in the case of the state owned banks included in the published PSE list.