December 15, 2017

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.


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Effective Date: January 01, 2018

Keywords: Europe, Switzerland, Banking, LCR, Liquidity Risk, Circular 2015/2, FINMA

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