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CRR ToolDelegated Regulation 2024/1085
Article 9

Article 9 - Assessment of the new product policy

Article 9

Assessment of the new product policy

When assessing whether the internal policies referred to in Article 325bi(1), point (e), of Regulation (EU) No 575/2013 are adequate for the introduction of any new product, including new financial instruments, activities, markets, booking locations or business lines, competent authorities shall verify whether:

(a)

the risk control unit has documented a new product policy and the management body has approved that policy, including a definition of ‘new product’;

(b)

the internal committee structure has a committee (‘new product committee’) that assesses, controls and monitors all issues arising from the introduction of new products, including, where relevant:

(i)

assessing regulatory compliance;

(ii)

reviewing any pricing models used for risk purposes;

(iii)

specifying the market parameters to be used for calibration purposes, the way the calibration is to be done, and the frequency of update of the calibration;

(iv)

introducing any new methodologies for assessing market risk;

(v)

assessing the impacts on the acceptable level of risk, capital adequacy, and profitability;

(vi)

ensuring the availability of front, back and middle office resources and internal tools and expertise that allow for the understanding and monitoring of any associated new risks;

(vii)

specifying and proposing to the management body the restrictions in terms of maturities, underlying, counterparties, and internal limits for such new product;

(viii)

assessing the adequacy of the accounting schemes and ensuring that the internal reporting appropriately reflects the underlying risks;

(c)

the management body, based on an assessment by the new product committee, authorises the trading of new products;

(d)

where the management body delegates the authorisation task to the new product committee:

(i)

the volume allowed for the new product is restrictive enough to prevent any material losses stemming from such new products, including, where appropriate, shorter trial periods for products referred to in Article 2, point (c);

(ii)

the authorisation is delegated separately for each type of new product and always for a limited period of time, with a maximum of 6 months;

(iii)

the authorisation, if renewed, is only renewed once by the management body;

(iv)

after a one-year period, all relevant issues referred to in point (b) are addressed, or no additional trading in that new product is allowed;

(e)

without the specific approval from the new product committee, the business areas are not authorised to trade new products before the issues referred to in point (b) are addressed;

(f)

in the specific cases where traders are allowed to trade new products that do not comply with point (b), the new-product committee approves the transactions on an individual basis and within the limits referred to in point (d)(i);

(g)

the new product committee meets frequently enough to evaluate and approve any new product transaction and to monitor all the issues referred to in point (b) that those transactions may pose;

(h)

transactions are monitored individually until all issues referred to in point (b) have been fully addressed and, based on an assessment by the new product committee, the management body confirms that the transactions are fully incorporated into all relevant IT systems and controlled via the regular risk-management system;

(i)

all new products, regardless of their degree of incorporation into the IT systems, are computed both in the internal risk-measurement model and in the daily changes to the portfolio’s value used for back-testing and profit and loss attribution test purposes.