Recital 1

(1)Regulation (EU) No 575/2013 establishes, among other matters, prudential requirements for investment firms in order to ensure that investment firms are safe and sound and comply at all times with the own funds requirements. Own funds requirements established by that Regulation aim to ensure that risks stemming from business activities are covered by a sufficient amount of own funds. According to Article 97 of Regulation (EU) No 575/2013 firms (i.e. investment firms and entities referred to in point (2)(c) of Article 4(1)) can use an alternative method based on fixed costs to calculate the total risk exposure. It is therefore necessary to establish the methodology for calculating fixed overheads and the list of items that would be included in the calculations in order to have a common approach in all Member States.