1. To be eligible for the treatment set out in Article 153(3), credit protection deriving from a guarantee or credit derivative shall meet the following conditions:
(a) the underlying obligation is to one of the following exposures:
(i) a corporate exposure as referred to in Article 147, excluding insurance and reinsurance undertakings;
(ii) an exposure to a regional government, local authority or public sector entity which is not treated as an exposure to a central government or a central bank in accordance with Article 147;
(iii) an exposure to an SME, classified as a retail exposure in accordance with Article 147(5);
(b) the underlying obligors are not members of the same group as the protection provider;
(c) the exposure is hedged by one of the following instruments:
(i) single-name unfunded credit derivatives or single-name guarantees;
(ii) first-to-default basket products;
(iii) nth-to-default basket products;
(d) the credit protection meets the requirements set out in Articles 2
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