RTS: Exotic underlyings and residual risks for own funds requirements

This regulation sets technical standards for how banks calculate the capital they must hold to cover 'residual risks.' These are risks associated with complex financial instruments, such as those with exotic underlyings, which are not fully captured by standard risk models.

This affects banks and credit institutions operating in the EU. It ensures they maintain sufficient financial buffers to prevent instability when dealing with high-risk or unconventional investment products.