Question ID
2022_6459
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Accounting and auditing
Article
104
Paragraph
3
Subparagraph
2
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
-
Type of submitter
Individual
Subject matter
Embedded Derivatives under Art 24 (1) CRR versus Art 104 (3)
Question

Can an institution be compliant with Art 24 (1) CRR, if embedded derivate and its host contract treated independently pursuant to Art 104 (3) Second Subparagraph of Proposal for amending CRR?

Background on the question

The Proposal for amending CRR in 2021 proposes in Art 104 (3) that an embedded derivative shall be split from the host contract with the result that both instruments are classified to a trading or non-trading book independently for each other. However, accounting standards, such as IFRS 9, generally treat embedded option and host contract as a joint contract as in IFRS 9.4.3.3. To be compliant with Art 24 (1) CRR, an institution shall treat the embedded derivates and host contract as one contract, while the regulatory treatment requires a split.  

Submission date
Rejected publishing date
Rationale for rejection

This question has been rejected because the matter it refers to is related to aspects of the regulatory framework which are not yet in force. 

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Status
Rejected question