Concentration risk

Competent authorities shall ensure that the concentration risk arising from exposures to each counterparty, including central counterparties, groups of connected counterparties, and counterparties in the same economic sector, geographic region or from the same activity or commodity, the application of credit risk mitigation techniques, and including in particular risks associated with large indirect credit exposures, such as a single collateral issuer, is addressed and controlled, including by means of written policies and procedures. For crypto-assets without an identifiable issuer, the concentration risk shall be considered in terms of exposure to the crypto-assets with similar features.

Competent authorities shall assess and monitor developments in the practices of institutions concerning the management of their concentration risk arising from exposures towards central counterparties, including the plans developed in accordance with Article 76(2), fifth subparagraph of this Directive, as well as the progress made in adapting their business models to the requirements laid down in Article 7a (opens EUR-Lex in a new tab) of Regulation (EU) No 648/2012 (opens EUR-Lex in a new tab).