Level of application of permissions for consolidated netting

In accordance with Article 4(1), point (47) and (48), of Regulation (EU) No 575/2013 (CRR), compliance with the requirements of the CRR on a consolidated basis can refer to any of the levels at which compliance with the CRR's requirements of a group of entities is required in accordance with Part One, Title II, Chapter 2, of the CRR, including the compliance of the group at the level of the EU parent institution (Article 11(1) CRR), the compliance of the group at the level of a parent institution in a Member State (Article 11(1) CRR), the compliance of the group on a sub-consolidated basis (where applicable, e.g. Articles 11(6) or 22 CRR). Consequently, competent authorities can grant permissions in accordance with Article 325b CRR for the purposes of the compliance with the requirements of Part Three, Title IV, of the CRR, at any of these levels. The permission to offset positions granted for a certain (sub)group at a certain level enables only the offsetting of positions between the (specified) entities forming part of that (sub)group. Example 1 X is the ultimate parent of the group P, subsidiary of X, parent in Member State 1, requests the permission for its compliance with the own funds requirements for market risk P has three subsidiaries A, B, C. The permission granted in accordance with Article 325b CRR covers all entities included in that P's scope of consolidation. In example 1, offsetting would be allowed between P, A, B and C, but not between them and entity X. The scope of a permission granted in accordance with Article 325b CRR does not have to match the scope of consolidation at which it was granted, i.e. a permission can be granted for subsets of entities, instead of all entities, included in that scope of consolidation. Example 2 X is the ultimate parent of the group P, subsidiary of X, parent in Member State 1, requests the permission for its compliance with the own funds requirements for market risk P has three subsidiaries A, B, C. The permission granted in accordance with Article 325b CRR covers A, B, and C, but excludes P. In example 2, offsetting would be allowed between A, B and C, but not permitted between A/B/C and an entity X, between A/B/C and an entity P, between X and P.