FED Proposes to Revise Guidance on Managing Funding and Liquidity Risk
FED is proposing to revise and extend, for three years, the interagency policy statement on funding and liquidity risk management (FR 4198; OMB No. 7100-0326). The guidance summarizes principles of sound liquidity risk management that the agencies had identified in the past and, where appropriate, harmonized those principles with the “Principles for Sound Liquidity Risk Management and Supervision,” which were issued by BCBS in September 2008. The consultation period ends on August 26, 2019. FED also published a supporting statement for the interagency policy statement on funding and liquidity risk management.
The interagency policy statement on funding and liquidity risk management (guidance) was issued to provide consistent interagency expectations on sound practices for managing funding and liquidity risk. FED is proposing to revise FR 4198 to account for certain aspects of the guidance that include recordkeeping provisions for liquidity risk management policies, procedures, and assumptions and contingency funding plans. At present, FR 4198 does not account for the recordkeeping provisions for contingency funding plans and does not fully account for the recordkeeping provisions related to liquidity risk management policies, procedures, and assumptions.
The guidance also includes a number of voluntary recordkeeping provisions that apply to bank holding companies, savings and loan holding companies, state-licensed branches and agencies of foreign banks (other than insured branches), corporations organized or operating under sections 25 or 25A of the Federal Reserve Act, and state member banks. The estimated number of respondents for implementing recordkeeping is 30 and for ongoing recordkeeping is 4,789. No required reporting forms are associated with the guidance (the FR 4198 designation is for internal purposes only). The documentation required by the guidance is maintained by each institution; therefore, the documentation is not collected or published by FED. The guidance was published jointly by the agencies; however, there has been no consultation outside of the Federal Reserve System with regard to the current proposal to extend the FR 4198 for three years, with revision.
Related Links
Comment Due Date: August 26, 2019
Keywords: Americas, US, Banking, FR 4198, Supporting Statement, Liquidity Risk, BCBS Principles, FED
Featured Experts
Karen Moss
Senior practitioner in asset and liability management (ALM) and liquidity risk who assists banking clients in advancing their treasury and balance sheet management objectives
Previous Article
EC Issues Corrigendum to Regulation Related to Solvency IIRelated Articles
HKMA Consults on Supervisory Policy for OTC Derivatives Transactions
HKMA is consulting on revisions to the Supervisory Policy Manual module CR-G-14 on margin and other risk mitigation standards for non-centrally cleared over-the-counter (OTC) derivatives transactions.
PRA on Regulatory Capital and IFRS 9 Requirements for Payment Holidays
PRA provided further information on the application of regulatory capital and IFRS 9 requirements to payment holidays granted or extended to address the challenges arising from COVID-19 outbreak.
HKMA on Fintech Adoption and Innovation by Banks in Hong Kong
HKMA announced the publication of a report on fintech adoption and innovation in the banking industry in Hong Kong.
BIS on Impact of Increasing Use of Cloud Technology on Cyber Risk
BIS published a working paper that examines the drivers of cyber risk, especially in context of the cloud services.
ECB Consults on Guide for Managing Climate and Environmental Risks
ECB launched consultation on a guide specifying how the Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy.
ECB Issues Opinion on Revisions to CRR in Response to COVID Crisis
ECB published an opinion (CON/2020/16) on amendments to the prudential framework in EU in response to the COVID-19 pandemic.
EBA Assesses Interlinkages Between Recovery and Resolution Planning
EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD).
SRB Publishes Final MREL Policy Under the Banking Package
SRB published the final Minimum Requirements for Own Funds and Eligible Liabilities (MREL) policy under the Banking Package.
US Agencies Amend Interim Final Rule on Transition Period for CECL
US Agencies (FDIC, FED, and OCC) published a final rule that makes technical changes to the March 31, 2020 interim final rule that provides a five-year transition period for the impact of the current expected credit loss (CECL) methodology on regulatory capital.
ECB Releases Results of March Survey on Credit Terms and Conditions
ECB published results of the March 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets.
