AI Summary of Article 273b Non-compliance with the conditions for using simplified methods for calculating the exposure value of derivatives and the simplified approach for calculating the own funds requirements for CVA risk
Institutions must promptly inform the relevant authority if they no longer comply with any conditions delineated in Article 273a(1) or (2). Should an institution fail to adhere to these conditions for three consecutive months or for more than six months within a year, it must cease calculating exposure values for derivative positions and associated capital requirements for counterparty credit risk (CVA).
Reinstatement of these calculations is contingent on the institution demonstrating compliance with the stipulated conditions consistently for a full year, thus ensuring regulatory adherence and financial stability.
Article 273b Non-compliance with the conditions for using simplified methods for calculating the exposure value of derivatives and the simplified approach for calculating the own funds requirements for CVA risk
1. An institution that no longer meets one or more of the conditions set out in Article 273a(1) or (2) shall immediately notify the competent authority thereof.
2.Institutions shall cease to calculate the exposure values of their derivative positions in accordance with Section 4 or 5 and to calculate the own funds requirements for CVA risk in accordance with Article 385, as applicable, within three months of the occurrence of one of the following:
(a) the institution does not meet the conditions set out in point (a) of Article 273a(1) or (2), as applicable, or the conditions set out in point (b) of Article 273a(1) or (2), as applicable, for three consecutive months;