Article 4
Fulfilment of the retention requirement through a synthetic or contingent form of retention
1.
The retention requirement may be fulfilled in a manner equivalent to one of the options set out in the second subparagraph of Article 405(1) of Regulation (EU) No 575/2013 through a synthetic or contingent form of retention where the following conditions are met:
(a)
the amount retained is at least equal to the requirement under the option to which the synthetic or contingent form of retention can be equated;
(b)
the retainer has explicitly disclosed that it will retain, on an ongoing basis, a material net economic interest in that manner, including details of the form of retention, the methodology used in its determination and its equivalence to one of those options.
2.
Where an entity other than a credit institution as defined in Article 4(1)(1) of Regulation (EU) No 575/2013 acts as a retainer through a synthetic or contingent form of retention, the interest retained on a synthetic or contingent basis shall be fully collateralised in cash and held on a segregated basis as ‘clients’ funds as referred to in Article 13(8) of Directive 2004/39/EC of the European Parliament and of the Council (
1
).
( 1 ) Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC (OJ L 145, 30.4.2004, p. 1).