Article 473a(1) of the CRR introduces an option for institutions to apply the transitional arrangements. According to the first subparagraph of Article 473a(9) of the CRR, the institution shall inform the competent authority (CA) of its initial decision regarding the application of transitional arrangements by 1 February 2018. The institution, however, may reverse the initial decision to apply or not apply the transitional arrangements once during the transitional period, subject to prior permission of the CA. Further, the second subparagraph of Article 473a(9) sets out an option for institutions that decided to apply the transitional arrangements not to apply Article 473a(4) of CRR (i.e. the dynamic component). In that case, the CA shall also be informed by the institution by 1 February 2018. Similar to the decision on whether to apply or not the transitional arrangements, the decision on whether to apply or not to apply the dynamic component may be reversed once during the transitional period, subject to prior permission of the CA. In line with Recital 6 of Regulation (EU) 2017/2395, the reversal of the initial decision is allowed subject to the prior permission of the relevant CA, which should ensure that such decision is not motivated by considerations of regulatory arbitrage. The legal text is neutral between use or non-use of the transitional arrangements. For that reason a ‘subsequent’ (meaning reversal of an initial) decision taken after 1 February 2018 not to use them would as much require the permission of the CA as a subsequent decision taken after 1 February 2018 to apply them. |