Regulatory Alerts2025-04-23
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Commission Delegated Regulation (EU) 2025/789 on regulatory technical standards for determining extraordinary circumstances under Regulation (EU) No 575/2013
The European Commission adopted Delegated Regulation (EU) 2025/789 to specify the conditions and indicators the European Banking Authority (EBA) must use to determine whether extraordinary circumstances have occurred under Articles 325az(5) and 325bf(6) of Regulation (EU) No 575/2013. The EBA is required to consider a 250-business-day period as involving extraordinary circumstances if it contains a timespan marked by significant cross-border financial market stress or a major regime shift that renders back-testing or profit and loss attribution results non-representative of internal model adequacy. In making this assessment, the EBA must evaluate indicators including volatility indices, correlation changes, the speed of stress manifestation, and comparisons to the global financial crisis or COVID-19 pandemic levels. This Regulation entered into force on the twentieth day following its publication in the Official Journal of the European Union on 1 August 2025.
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