(6)In line with the international accounting standards, institutions are in general required to measure their financial instruments bearing commodity risk at fair value for the calculation of own funds requirements. However, where an institution physically holds a commodity and does not use the fair value of that position for accounting purposes, the fair value of that position should be used as a basis for calculating the own funds requirements for market risk, since it ensures an accurate and simple implementation of the alternative standardised approach. In addition, using the fair value as a basis allows institutions to accurately recognise hedges and diversification effects between the positions that are held in the non-trading book and those held in the trading book. That basis should be updated monthly, thereby ensuring a proportionate approach, in particular compared with the daily frequency at which institutions are required to update the commodity risk factors under the alternative internal model approach.