Market making in several AT1 or T2 instruments

Where an institution applies for a prior permission for repurchase of several Additional Tier 1 or Tier 2 capital instruments according to Article 78(1), second subparagraph, of the CRR, may the predetermined amount of the permission be set for several instruments or must a predetermined amount be set for each instrument?

When applying for permission for repurchase of several Additional Tier 1 or Tier 2 capital instruments for market making purposes, the reading of Article 29 (3) (b) of Regulation (EU) 241/2014 could suggest that permissions must be given for a predetermined amount for each instrument. Specifically, this would mean the limits set out in Article 29(3)(b)(1) and (2) is evaluated for each instrument, and the predetermined amount of the application up to 10% of the issuance, not exceeding 3% of the total outstanding AT1 or T2 instruments, is to be deducted from own funds. Alternatively, the permission may apply the limits of Article 29(3)(b) of Regulation (EU) 241/2014 to several instruments. This means that permission to repurchase several AT1 or T2 instruments may be granted for up to 3% of total amount of outstanding AT1 or T2 instruments while maintaining that no more than 10% of the amount of each individual issuance is repurchased at any time. The permissible predetermined amount can be used to repurchase across all instruments of the relevant capital tier and is not specified for each individual instrument and the deduction is to be taken for the total permissible amount. This allows for flexible market making across issuances and time in several instruments. This is shown in the following example. Example: An institution has four AT1 capital instruments with an amount of 100 of each issuance, and total amount of outstanding AT1 instruments of 400. Under the proposed answer the institution can apply for a permission to repurchase a predetermined amount of 12 or a lower amount (up to 3 % of the total of 400), and can freely distribute the permissible amount for repurchase among the AT1 instruments, while maintaining that the repurchased amount of each individual instrument is capped at 10 (10% of the amount of 100). The predetermined amount of the permission (12 or lower) is to be deducted from AT1, at the moment the permission is granted. Disclaimer: This Q&A was submitted prior to the amendments introduced with Regulation (EU) 2019/876 (CRR 2) and the enter into force of its relevant delegated act. Therefore, the legal references made by the submitter are not reflected in the revised answer.