1. The exposure of an AIF calculated in accordance with the commitment method shall be the sum of the absolute values of all positions valued in accordance with section 3.9 of the Investment Funds sourcebook, and all delegated acts adopted pursuant to Article 19 of Directive 2011/61/EU which form part of retained EU law, subject to the criteria provided for in paragraphs 2 to 9.

2. For the calculation of the exposure of an AIF in accordance with the commitment method an AIFM shall:

(a) convert each derivative instrument position into an equivalent position in the underlying asset of that derivative using the conversion methodologies set out in Article 10 and paragraphs (4) to (9) and (14) of Annex II;

(b) apply netting and hedging arrangements;

(c) calculate the exposure created through the reinvestment of borrowings where such reinvestment increases the exposure of the AIF as defined in paragraphs (1) and (2) of Annex I;

(d) include other arrangements in the calculation in accordance with paragraphs (3) and (10) to (13) of Annex I.

3. For the purposes of calculating the exposure of an AIF according to the commitment method: