(12)The default risk own funds requirement under the alternative standardised approach captures the default risk of issuers and obligors of exposures subject to market risk, over a one-year time horizon. Hedges are recognised for exposures to the same issuer or obligor subject to specific conditions, including on maturity mismatches between different positions. Some of those conditions do not allow for the recognition of the economic hedge between an equity derivative and a cash position of the same underlying, which is a risk management approach widely used in practice. To incentivise hedging and ensure alignment with similar measures in other jurisdictions, that type of economic hedging should be recognised in the calculation of the own funds requirements for default risk under the alternative standardised approach.