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Guide · Transactions · 8 min
Limited-risk distribution
Test the operating model against actual risk control, commercial conduct, method selection and market outcomes.
01
The label is not the analysis
A limited-risk distributor must be assessed through its actual conduct. Review pricing authority, inventory decisions, marketing activity, customer relationships, credit exposure and the control of material market risks.
02
Method and outcome
- Consider internal CUP or RPM evidence before defaulting to TNMM.
- Define the tested activity and segmented results.
- Select the PLI and comparable set consistently with the functions.
- Explain losses, exceptional costs and local market conditions.
- Assess whether year-end adjustments follow the documented policy.
03
Local File focus
The documentation should connect the contractual model, actual decision-making, financial outcome and any adjustment. Avoid generic functional descriptions that do not address the entity's market.