67 with the cash flows of a benchmark asset. If the difference between the cash flows of the financial asset and the benchmark asset is considered immaterial, the asset is deemed to be simple financing. Moreover, a specific analysis is conducted when the financial asset is issued by special purpose entities establishing a differentiated order of payment among the holders of the financial assets by contractually linking multiple instruments and creating concentrations of credit risk (“tranches”). Each tranche is assigned a rank of subordination that specifies the order of distribution of cash flows generated by the structured CFM Indosuez Wealth. Business model Debt instruments Collection Collect & Sell Other / Sell SPPI TEST Met Amortised cost Fair value through other comprehensive income (items that may be reclassified) Fair value through profit or loss (SPPI Test N/A) Not met Fair value through profit or loss Fair value through profit or loss In this case, the SPPI test requires an analysis of the characteristics of contractual cash flows of the asset concerned and underlying assets according to the “look-through” approach and the credit risk borne by the tranches subscribed, compared to the credit risk of the underlying assets. The method of accounting for debt instruments resulting from determining the business model and performing the SPPI test can be presented in the form of the diagram below: Debt instruments at amortised cost Debt instruments are valued at amortised cost if they are eligible for the collect model and if they meet the SPPI test. They are recorded on the settlement date and their initial valuation also includes accrued coupons and transaction costs. Amortisation of any premiums/discounts and transaction costs on loans and receivables and fixed income securities is recognised in the income statement using the effective interest rate method. This category of financial instruments is subject to expected loss adjustments (ELA) under the conditions described in the specific paragraph "Impairment and provisioning for credit risk". Debt instruments at fair value through other comprehensive income recyclable to income Debt instruments are valued at fair value through other comprehensive income on items that may be reclassified if they are eligible for the collect and sell model and if they meet the SPPI test. They are recorded on the trade date and their initial valuation also includes accrued coupons and transaction costs. Amortisation of any premiums or discounts and transaction costs on fixed-income securities is recognised in the income statement using the effective interest rate method. These financial assets are subsequently measured at fair value, with changes in fair value recorded in other comprehensive income on items that may be reclassified and offset in Outstandings (excluding accrued interest recognised in profit or loss according to the EIR method). If the securities are sold, these changes are transferred to the Income Statement. This category of financial instruments is subject to expected loss adjustments (ELA) under the conditions described in the specific paragraph "Impairment and provisioning for credit risk" (without affecting the fair value in the balance sheet). Debt instruments at fair value through profit or loss Debt instruments are measured at fair value through profit or loss in the following cases: - The instruments are classified in portfolios consisting of financial assets held for trading or whose main purpose is their sale; Financial assets held for trading are assets acquired or generated by the business primarily for the purpose of selling them in the short term or as part of a portfolio of instruments jointly managed for the purpose of obtaining a profit related to short-term price fluctuations or an arbitraging margin. Although contractual cash flows are collected during the time that CFM Indosuez Wealth holds the assets, the collection of these contractual cash flows is not essential but incidental.
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