RTS: Materiality of IRB and AMA extensions/changes (Reg 575/2013)

This regulation sets out technical standards for how regulators evaluate changes or extensions to the internal models banks use to calculate their own risk. It ensures that when banks update their internal ratings or measurement approaches, the changes are assessed consistently to maintain financial stability.

This primarily affects large financial institutions and banking supervisors. It ensures that banks cannot arbitrarily change their risk models to lower their capital requirements without proper regulatory oversight.