- Question ID
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2024_7058
- Legal act
- Regulation (EU) No 575/2013 (CRR)
- Topic
- Market risk
- Article
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325b
- Paragraph
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1
- COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
- Not applicable
- Article/Paragraph
-
-
- Type of submitter
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Competent authority
- Subject matter
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Level of application of permissions for consolidated netting
- Question
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How should the term “consolidated basis” be read? Should such permissions be granted only to the highest EU consolidated entity or is it possible to grant these permissions also to several EU sub-consolidated entities? If it is possible to apply this requirement also on sub-consolidated basis, should the netting of the positions only refer to undertakings included in such entity’s sub-consolidating group?
- Background on the question
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Article 325b introduces the possibility to offset positions among different institutions or undertakings for the purpose of calculating net positions and own funds requirements on a consolidated basis, subject to permission of competent authority. It is unclear what should be considered by “consolidated basis”. Point 8 of the Article 4(1) of the CRR explains that this means on the basis of the consolidated situation. Point 7 of the Article 4(1) of the CRR further explains that consolidated situation means prudential consolidation as if that institution formed, together with one or more other entities, a single institution. However, it is unclear does this consolidated basis refers only to a “EU parent institution” (point 29 of the Article 4(1) of the CRR) or also includes a “parent institution in a Member State” (point 28 of the Article 4(1) of the CRR) or a “parent undertaking” (point 15 of the Article 4(1) of the CRR).
If this netting of the positions is allowed also at level of a “parent institution in a Member State” or a “parent undertaking” such netting may be performed only for institutions belonging to that particular sub-consolidated group. It is not possible to include in such netting institutions belonging to the same group that are not consolidated into this sub-group (such as positions of the overall EU parent entity or positions of other institutions belonging to other EU entities that are not consolidated within this sub-group).
- Submission date
- Status
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Question under review
- Answer prepared by
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Answer prepared by the EBA.