1. After having verified an institution's compliance with the requirements of Sections 2, 3 and 4 as relevant, competent authorities shall grant permission to institutions to calculate their own funds requirements for one or more of the following risk categories by using their internal models instead of or in combination with the methods in Chapters 2 to 4:
(a) general risk of equity instruments;
(b) specific risk of equity instruments;
(c) general risk of debt instruments;
(d) specific risk of debt instruments;
(e) foreign-exchange risk;
(f) commodities risk.
2. For risk categories for which the institution has not been granted the permission referred to in paragraph 1 to use its internal models, that institution shall continue to calculate own funds requirements in accordance with those Chapters 2, 3 and 4 as relevant. Permission by the competent authorities for the use of internal models shall be required for each risk category and shall be granted only if the internal model covers a significant share of the positions of a certain risk category.
3. Material changes to the use of internal models that the institution has received permission to use, the extension of the use of internal models that the institution has received permission to use, in particular to additional risk categories, and the initial calculation of stressed value-at-risk in accordance with Article 365(2) require a separate permission by the competent authority.
Institutions shall notify the competent authorities of all other extensions and changes to the use of those internal models that the institution has received permission to use.
4. EBA shall develop draft regulatory technical standards to specify the following:
(a) the conditions for assessing materiality of extensions and changes to the use of internal models;
(b) the assessment methodology under which competent authorities permit institutions to use internal models;
(c) the conditions under which the share of positions covered by the internal model within a risk category shall be considered significant as referred to in paragraph 2.
EBA shall submit those draft regulatory technical standards to the Commission by 31 December 2014.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.