EBA · 2013_500 Archive

Calculating capital requirement for trading book positions - Derogation for small trading book business

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
94, para. 1
Topic
Market risk
Submitted by
Investment firm
Submitted
2013-11-04
Answer provided by
ESAs (EBA, ESMA, EIOPA)
Browse ECB SSM Register → More Q&As on this regulation →

Question

According to article 94(1) of Regulation (EU) No 575/2013 (CRR), institutions which meet specific conditions are allowed to use an exception in calculating capital requirements considering trading book exposures. In letter (b) of abovementioned article it states that the size of institution's on- and off-balance sheet trading-book business should never exceed 6 % of total assets and EUR 20 million. It does not specify a time horizon for such an event. Should the institution calculate the trading-book business values starting from January 1st 2014 or from the day that it started their trading-book activity? For an example, if the institution’s trading-book business exceeded 6% of total assets only once on June 24 2013, could the derogation be applicable on January 2nd 2014? If not, for how long is the institution restricted from making use of the derogation specified in article 94(1)(b)?

Background

Would not it be too restrictive to forbid the exception of small trading-book activities for the institution that exceed the condition once relevantly long time ago?

Answer

According to Article 521(2) of Regulation (EU) No 575/2013 (CRR) the requirements in Article 94(1) of the CRR apply from 1 January 2014. Therefore, an institution only needs to immediately notify its competent authority in cases where the conditions in Article 94(1)(b) of the CRR are not met after that date. If, following assessment by the competent authority, the competent authority determines and notifies the institution that the requirement of Article 94(1)(a) of the CRR is not met, the institution shall cease to make use of the derogation available under Article 94(1). In this case, the derogation for a small trading book business cannot be applied again without the express permission of the competent authority.

Original source: European Banking Authority, Q&A ID 2013_500

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

Similar Q&As

Scope of application of Articles 341 to 344 of Regulation (EU) No. 575/2013 (CRR)

Answered 2013-11-15

Scope of application of Articles 339 and 340 of Regulation (EU) No 575/2013 (CRR)

Answered 2013-11-15

How should IRB-institutions exclude exposures according to art 140.4?

Answered 2014-03-21

10% limit for significant investments (for threshold exemptions determination purposes)

Answered 2014-05-08

Client servicing in the definition of the trading book

Answered 2022-04-01

More Q&As on this topic

Application of Article 207(2) of the CRR to financial collateral under the counterparty credit risk framework

Answered 2026-05-29

SPV repack transactions

Answered 2026-05-29

Exclusion of back-to-back positions from RRAO

Answered 2025-10-31

Sources for external classification that is commonly used in the market for grouping issuers by sector, for the purpose of CRR Article 325ah.

Answered 2025-10-17

Multilateral development banks classification for the purpose of article 325ah

Answered 2025-06-27

📋 Track EU financial regulation continuously

Forseti monitors EU financial regulation and delivers personalised alerts anchored to verified official sources.

Start free trial → Learn more

14-day free trial. No credit card required.