Article 16
Assessment of the adequacy of the process relating to trading limit breaches
1. When assessing the adequacy of the process for the approval of trading limit breaches referred to in Article 104b(2), point (f), of Regulation (EU) No 575/2013, competent authorities shall verify whether:
|
(a) |
the institution has a clear and documented procedure for the approval by the management body of breaching trading limits; |
|
(b) |
the management body has specified materiality conditions according to which any breach of the trading limits are to be reported to the management body itself, irrespective of the level where the trading limits have been approved; |
|
(c) |
the risk control unit documents any breaches of the trading limits and reports such breaches to the responsible committee, sub-committee or individual manager; |
|
(d) |
the committee, sub-committee or individual manager referred to in point (c) either takes action when a trading limit is breached, or reports such breach to the management body, in accordance with point (b); |
|
(e) |
the documentation referred to in point (c) comprises the magnitude and main causes of the breach of the trading limit, including:
|
2. Competent authorities shall verify, in particular where a trading desk has frequently exceeded trading limits, whether the frequency and magnitude of breaches of trading limits, and the measures taken by the risk control unit and management body in response to such breaches, are appropriate. The competent authority shall conduct such verification.