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Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.

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Article 6 Material extensions and changes to the AMA

  1. (1)

    Extensions and changes to the AMA shall be considered material, if they fulfil any of the following conditions:

    1. (a)

      they fall under any extensions described in Annex II, Part I, Section 1;

    2. (b)

      they fall under any changes described in Annex II, Part II, Section 1;

    3. (c)

      they result in either of the following:

      1. (i)

        in a decrease of 10 % or more of either of the following:

        • the overall EU parent institution's consolidated own funds requirements for operational risk,
        • the overall own funds requirements for operational risk in the case of an institution which is neither a parent institution, nor a subsidiary;

      2. (ii)

        in a decrease of 10 % or more of either of the following:

        • the overall own funds requirements for operational risk at the consolidated level of a parent institution which is not an EU parent institution,
        • the overall own funds requirements for operational risk of a subsidiary where the parent institution has not received the permission to use the AMA.

  2. (2)

    For the purposes of paragraph (1)(c)(i), and in accordance with Article 3(2), the impact of any extension or change shall be assessed as a ratio calculated as follows:

    1. (a)

      in the numerator, the difference in the own funds requirements for operational risk associated with the scope of application of the AMA model before and after the extension or change at the UK parent institution's consolidated level or at the institution level which is neither a parent institution, nor a subsidiary;

    2. (b)

      in the denominator, the overall own funds requirements for operational risk before the extension or change at the EU parent institution's consolidated level or, respectively, at the institution level which is neither a parent institution, nor a subsidiary.

    The calculation shall refer to the same point in time.

    The determination of the impact on the own funds requirements shall refer only to impact of the extension and change to the AMA, and therefore the operational risk profile shall be assumed to remain constant.

  3. (3)

    For the purposes of paragraph (1)(c)(ii), and in accordance with Article 3(2), the impact of any extension or change shall be assessed as a ratio calculated as follows:

    1. (a)

      in the numerator, the difference in the own funds requirements for operational risk associated with the scope of application of the model before and after the extension or change at the consolidated level of a parent institution which is not an UK parent institution or at the subsidiary level where the parent institution has not received the permission to use the AMA;

    2. (b)

      in the denominator, the overall own funds requirements for operational risk before the extension or change at the consolidated level of a parent institution which is not an EU parent institution or, respectively, at the subsidiary level where the parent institution has not received the permission to use the AMA.

    The calculation shall refer to the same point in time.

    The determination of the impact on the own funds requirements shall refer only to impact of the extension and change to the AMA, and therefore the operational risk profile shall be assumed to remain constant.