Swiss Authorities Amend Liquidity Ordinance, Issue Other Updates
The Swiss Federal Council adopted amendments to the Liquidity Ordinance, which will enter into force on July 01, 2022. In addition, the Swiss Financial Market Supervisory Authority (FINMA) published a factsheet on crypto-assets and extended the duration of its protective measures at Sberbank (Switzerland) AG until August 02, 2022.
Below are the key highlights of the recent updates:
- During its meeting in June 2022, the Swiss Federal Council adopted amendments to the Liquidity Ordinance. The current requirements in the Liquidity Ordinance did not result in systemically important banks holding an appropriate and consistently higher level of liquidity. The requirements were therefore comprehensively revised and increased. The new regulatory concept for systemically important banks encompasses both basic and additional requirements. The basic requirements cover certain risks that are not sufficiently taken into account in the provisions applying to all banks. For instance, systemically important banks will now have to hold sufficient liquidity to weather a 90-day liquidity crisis (as opposed to 30 days). FINMA may also impose institution-specific surcharges. For the purposes of meeting the increased requirements, certain measures can be counted up to an upper limit, such as the sale of marketable securities that a bank can use to generate liquidity during a crisis. The affected banks will have a transition period of 18 months to comply with the new requirements.
- FINMA published a factsheet on crypto-assets, highlighting that anyone wishing to operate a business model with crypto-assets must check whether they require authorization or supervision under financial market law. In particular, providers of custody or trading activities with payment tokens may need to be licensed as a bank. The same applies to providers who hold payment tokens from several clients in their own wallets. However, under certain circumstances, a fintech license may be sufficient, which means that lower licensing requirements must be adhered to. If a business model involves the trading of securities, then the provider must also check whether authorization under the Financial Institutions Act or the Financial Market Infrastructure Act is required. This may be the case for the operation of trading and settlement platforms for asset tokens. Further, if FINMA receives specific information that an activity involving crypto-assets is being carried out without the authorization required under financial market law, it will launch an investigation.
- Finally, FINMA extended the duration of protective measures against Sberbank (Switzerland) AG. In March 2022, FINMA had announced these measures, which included a deferral of obligations from deposits and an extensive ban on payments and transactions. Due to the international sanctions environment and the subsequent risks to the liquidity situation of the bank, the measures will remain in place until August 02, 2022.
Related Links (in English and German)
- Press Release on Liquidity Ordinance
- Liquidity Ordinance (PDF)
- Explanatory Notes to the Ordinance (PDF)
- Factsheet on Crypto-Assets (PDF)
- Press Release on Sberbank (Switzerland) AG
Keywords: Europe, Switzerland, Banking, Liquidity Ordinance, Regtech, Credit Risk, Liquidity Risk, Sberbank, Swiss Federal Council, Crypto-Assets, FINMA
Previous Article
OJK Publishes Regulatory Updates for Financial Sector EntitiesRelated 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.