Question ID:
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Market infrastructures
305 and 306
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Not applicable
Disclose name of institution / entity:
Type of submitter:
Competent authority
Subject Matter:
Conditions to benefit from the 4% risk weight in Article 305(3) and treatment in Article 306

Does the application of the 4% risk weight referred to in Article 305(3) presuppose that the omnibus model meets all requirements set out in Article 305(2) lit (a) to (d) CRR and article 305(3) CRR together? Or, is Article 305(3) CRR meant to replace the requirement in article 305(2)(a), which presupposes an individual style segregation model?

Background on the question:

The question whether omnibus clearing models which are based on net omnibus segregation principles may benefit from the regulatory capital regime as set out in article 305(3) CRR is complex and there are possible arguments both ways as to the correct construction of the wording of that provision. In particular, the reference in Article 305(3) to ‘all other conditions in paragraph 2 are met’ could imply that segregation models must meet 305(2) points (a) to (d) and 305(3). If this is the case then the application of the treatment in accordance with Article 306, subject to replacing the 2 % risk weight with a 4 % risk weight referred to in Article 305(3), is essentially obsolete because only an individual segregation model would meet all the conditions of 305(2) and 305(3). Alternatively, the reference to ‘all other conditions’ could be understood to mean that the conditions of 305(3) should be considered in lieu of 305(2)(a).

Date of submission:
Published as Rejected Q&A
Rationale for rejection:

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Rejected question