FINMA Amends Circular 15/2 on Liquidity Risks for Banks
FINMA amended the circular (Circular 2015/2) on liquidity risks for banks, with the new rules entering into force on January 01, 2018. With the recent amendments, FINMA has simplified the way in which the liquidity coverage ratio (LCR) rule is applied to small banks, based on initial observations and feedback since implementation.
The circular also includes clarifications previously set forth in FINMA's frequently asked questions (FAQs) and recommendations from the BCBS in connection with its review of Swiss liquidity regulations (under Regulatory Consistency Assessment Program or RCAP). Revision of this circular had been necessitated by the Federal Council's amendment to a number of provisions on bank liquidity in the Liquidity Ordinance. FINMA had run a consultation, in January 2017, on the amendments to the circular and has incorporated some of the respondents' concerns into the final version of the circular. One adjustment has been to simplify the proving of differences resulting from calculating the LCR according to the settlement principle vis-à-vis the trading-day principle. In addition, FINMA has simplified the assumptions for liquidity outflows linked to terminated deposits and precious metal accounts and has streamlined a number of provisions on general loan agreements.
The revised circular does not include any rules on the net stable funding ratio or NSFR, in contrast to the draft version submitted for consultation. On November 22, 2017, the Federal Council had decided to re-evaluate the introduction of NSFR rules at the end of 2018, taking international developments into account.
Related Links
Effective Date: January 01, 2018
Keywords: Europe, Switzerland, Banking, LCR, Liquidity Risk, Circular 2015/2, FINMA
Previous Article
MAS Amends Notice 637 on Risk-Based Capital Adequacy Rules for BanksRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
