ESMA Q&A 1311 — Q&A — Calculation of denominator [Answer Published]

Calculation of denominator

Question

Should the denominator in the capital employed test under Article 5(4) of CDR 2021/1833 be calculated using consolidated accounts? Should firms use capital on a worldwide basis or just capital employed within the EU?

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Answer

[ESMA70-872942901 Commodity derivatives, Ancillary services, Q&A 10]

The CDR 2021/1833 RTS 20 capital employed test should be calculated using consolidated accounts. According to Article 5(4) of CDR 2021/1833, the capital employed for carrying out the main business of a group shall be the sum of the total assets of the group minus its short-term debt as recorded in the consolidated financial statements of the group at the end of the relevant annual calculation period.

Firms shall use capital employed on a worldwide basis when calculating the capital test.

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Source: ESMA original document