Recital 1

(1)According to the Basel Committee on Banking Supervision standards for market risk, competent authorities may permit institutions in exceptional situations, not to comply with certain requirements of the alternative internal models approach in relation to the back-testing and the profit and loss attribution requirements. In line with the principle established by those standards, exceptional circumstances should only be deemed to be prevalent in a situation of significant cross-border financial market stress, or of a major regime shift, that materially affects institutions across the Union.