The other add-on is the simplest of the six SA-CCR risk categories. It applies to instruments that do not fit any of the five standard categories — weather derivatives, freight rates, inflation swaps, and similar.

The commodity add-on is built in three layers. Risk positions are first aggregated at the reference commodity level to produce an Effective Notional. Each reference commodity then produces a Type Addon equal to its Effective Notional multiplied by the supervisory factor. All Type Addons within a hedging set are combined using a formula that splits risk into a systemic component — capturing net directional exposure to the common commodity factor and

The equity add-on is built in three layers. Risk positions are first aggregated at the reference entity level to produce an Effective Notional. Each reference entity then produces an Entity Addon equal to its Effective Notional multiplied by the supervisory factor.

The credit add-on is built in three layers. First, risk positions are aggregated at the reference entity level to produce an Effective Notional. Second, each reference entity produces an Entity Addon equal to its Effective Notional. Third, all Entity Addons within a hedging set are combined using a formula that separates risk into a systemic component — capturing net directional exposure to a common credit factor — and an idiosyncratic component

The FX add-on is calculated at the hedging set level. Each currency pair is its own hedging set, and trades within it are simply summed — no maturity buckets, no cross-term coefficients. The absolute value of that sum is the Effective Notional, which is then scaled by the Supervisory Factor and coefficient to produce the hedging set add-on.

The interest rate add-on is calculated at the hedging set level. Trades in the same currency are grouped together, their risk positions are summed into three maturity buckets, and the bucket sums feed a regulatory formula that allows partial — but not full — cross-bucket netting. The result is scaled by the supervisory factor to produce the hedging set add-on. </p>

Hedging sets are groups of trades within a netting set for which partial offsetting is permitted. Only trades assigned to the same hedging set can net against one another — trades in different hedging sets contribute independently to the Add-On, with no cancellation between them.

The Maturity Factor (MF) is the third component of the Risk Position. Calculated at the trade level, it scales each trade's contribution to the Add-On by its remaining time horizon. The formula depends on whether the netting set is margined or unmargined.

The Adjusted Notional is the second component of the Risk Position. Calculated at the trade level, it converts a raw contract notional into a standardised measure of exposure size that is consistent across asset classes. The calculation depends on risk category — unlike the Supervisory Delta, which depends on instrument type.

The Supervisory Delta (δ) is the first component of the Risk Position. Calculated at the trade level, it captures the direction of a trade's exposure to its primary risk driver and adjusts for optionality. The formula depends on instrument type.

Before any trade can contribute to the Add-On, it must be expressed as a single signed number — the Risk Position. Calculated at the trade level, one per transaction, it compresses three dimensions of a trade into one quantity: direction, size, and time. Trades with opposite Risk Positions offset each other within a hedging set, which is how genuine hedges reduce capital.

The Add-On is the engine of SA-CCR. It estimates how much a derivatives portfolio's exposure could grow over the remaining life of its trades, and it drives the Potential Future Exposure (PFE) — one of the two inputs to the Exposure at Default.