This summary pertains to the provision allowing competent authorities to derogate from Article 325bf under specific, exceptional circumstances. Institutions may, on an individual basis, be permitted to exclude overshootings identified through back-testing—either hypothetical or actual—from their calculations as long as these overshootings are not attributable to shortcomings in the institution’s internal model.

Importantly, this exemption applies strictly to events occurring within the timeframe of 1 January 2020 to 31 December 2021, thereby providing a significant regulatory relief for institutions navigating compliance challenges during this period.