This document outlines the conditions under which an institution may exclude certain risk positions from its own funds requirements for market risk, specifically in relation to foreign exchange risks impacting capital ratios. To qualify for this exclusion, institutions must limit the excluded risk to the extent that it neutralises sensitivity to adverse foreign exchange movements, maintain this exclusion for a minimum of six months, and establish a robust risk management framework encompassing a clear hedging strategy.

Furthermore, the institution must obtain consent from the competent authority and provide thorough justification for the exclusion, including details about the risk position. Consistency in application of these exclusions is mandated, and the European Banking Authority will develop regulatory standards to guide institutions in their compliance efforts by mid-2026.