http://www.legislation.gov.uk/eur/2013/575/article/283Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (Text with EEA relevance)Regulation (EU) No 575/2013 of the European Parliament and of the CouncilRegulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (Text with EEA relevance)King's Printer of Acts of Parliamenthttps://webarchive.nationalarchives.gov.uk/eu-exit/https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02013R0575-20201228texttext/xmlen2026-01-13Expert Participation2026-01-01 PART THREE <Substitution ChangeId="O000002M002" CommentaryRef="c000001" Correction="true">CAPITAL REQUIREMENTS</Substitution> TITLE II <Substitution ChangeId="O000002M002" CommentaryRef="c000001" Correction="true">CAPITAL REQUIREMENTS FOR CREDIT RISK</Substitution> CHAPTER 6 <Substitution ChangeId="O000002M002" CommentaryRef="c000001" Correction="true"> Counterparty credit risk </Substitution> Section 6 <Substitution ChangeId="O000002M002" CommentaryRef="c000001" Correction="true"> Internal Model Method </Substitution><Substitution ChangeId="O000002M002" CommentaryRef="c000001" Correction="true">Permission to use the Internal Model Method</Substitution> Article 283 1Provided that the competent authorities are satisfied that the requirement in paragraph 2 have been met by an institution, they shall permit that institution to use the Internal Model Method (IMM) to calculate the exposure value for any of the following transactions:atransactions in Article 273(2)(a);btransactions in Article 273(2)(b), (c) and (d);ctransactions in Article 273(2)(a) to (d),Where an institution is permitted to use the IMM to calculate exposure value for any of the transactions mentioned in points (a) to (c) of the first subparagraph, it may also use the IMM for the transactions in Article 273(2)(e).Notwithstanding the third subparagraph of Article 273(1), an institution may choose not to apply this method to exposures that are immaterial in size and risk. In such case, an institution shall apply one of the methods set out in Sections 3 to 5 of Chapter 3 of the Counterparty Credit Risk (CRR) Part of the PRA Rulebook to these exposures where the relevant requirements for each approach are met. 2Competent authorities shall permit institutions to use IMM for the calculations referred to in paragraph 1 only if the institution has demonstrated that it complies with the requirements set out in this Section, and the competent authorities verified that the systems for the management of CCR maintained by the institution are sound and properly implemented. 3The competent authorities may permit institutions for a limited period to implement the IMM sequentially across different transaction types. During this period of sequential implementation institutions may use the methods set out in Sections 3 to 5 of Chapter 3 of the Counterparty Credit Risk (CRR) Part of the PRA Rulebook for transaction type for which they do not use the IMM. 4For all OTC derivative transactions, and for long settlement transactions for which an institution has not received permission under paragraph 1 to use the IMM, the institution shall use the methods set out in Section 3 of Chapter 3 of the Counterparty Credit Risk (CRR) Part of the PRA Rulebook. Those methods may be used in combination on a permanent basis within a group. 5An institution which is permitted in accordance with paragraph 1 to use the IMM shall not revert to the use of the methods set out in Sections 3 to 5 of Chapter 3 of the Counterparty Credit Risk (CRR) Part of the PRA Rulebook unless it is permitted by the competent authority to do so. Competent authorities shall give such permission if the institution demonstrates good cause. 6If an institution ceases to comply with the requirements laid down in this Section, it shall notify the competent authority and do one of the following:apresent to the competent authority a plan for a timely return to compliance;bdemonstrate to the satisfaction of the competent authority that the effect of non-compliance is immaterial. Substituted by Corrigendum to Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).Art. 283(4) substituted (1.1.2022) by Financial Services Act 2021 (c. 22), s. 49(5), Sch. 4 para. 8; S.I. 2021/671, reg. 5(1)(c) (with reg. 5(2)) (as amended by S.I. 2021/1163, regs. 1(2), 2)Words in Art. 283(1) substituted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 25(33)(a)Words in Art. 283(3) substituted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 25(33)(b)Words in Art. 283(4) substituted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 25(33)(c)Words in Art. 283(5) substituted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 25(33)(d)