Article 14 Assessment of adequacy of trading limits

the institution has a clear breakdown of trading limits that is consistent with the acceptable level of risk set by the institution and the budget of each trading desk;

the choice of the trading limits reflects the trading strategy of the trading desk and the nature of the underlying risks;

the trading limits include the following:

the institution has a further breakdown in the value-at-risk limits, proportional to the institution’s trading strategies;

all internal limits, including those referred to in point (c), are properly documented and formally approved;

as part of the limit approval and update process, the risk control unit assesses and documents the consistency and compatibility between the value-at-risk limits approved by the management body and the rest of the internal limits not based on value-at-risk, including sensitivities or loss trigger;

the institution properly documents and formally approves an inventory of authorised instruments and underlying risk positions that traders can enter.

For the purposes of point (c)(i), the value-at-risk limit shall be the sum of individual value-at-risk limits when the permission to use the internal model approach, as referred to in Article 325(1), point (b), of Regulation (EU) No 575/2013, has not been granted.