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:
-
Disclose name of institution / entity:
No
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.  

Date of submission:
20/05/2022
Published as Rejected Q&A
26/07/2022
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. 

For further information on the purpose of this tool and on how to submit questions, please see “Additional background and guidance for asking questions”.

Status:
Rejected question
Image CAPTCHA