(11)The residual risk add-on (RRAO) determines an additional capital requirement for risks that are not already addressed by the other components of the alternative standardised approach. As the RRAO charge is calculated based on an instrument’s notional value regardless of its risk, and hedging is recognised only in cases where the hedged and the hedging instrument perfectly match, there could be cases where the own funds requirements for RRAO are misaligned with the actual residual risk at trading desk level. To avoid disproportionate capital requirements for instruments with residual risks that credit institutions might be able to hedge to a large extent in the market, and to preserve the level playing field vis-à-vis other jurisdictions which have implemented or will implement specific measures with regard to the RRAO, it should be laid down that multipliers are to be applied to RRAO capital requirements for instruments that have future realised volatility as an underlying, that are options that can be exercised on a finite number of dates, or that are options on the difference between two constant maturity swap rates denominated in the same currency, where those instruments attract an RRAO charge only for those reasons.