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
EBA Finalizes Remuneration Standards for Investment Firms in EU
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
ECA Recommends Actions to Enhance Resolution Planning for Banks
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE Publishes Key Elements of the 2021 Stress Testing for Banks in UK
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA Proposes Rules on Identity Verification of Depositor Protection
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB Publishes Work Program for 2021
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA Issues Update on Move to New Data Collection Platform
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank Publishes Derivation Rules for Reporting by Banks
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED Revises Capital Planning and Stress Testing Requirements for Banks
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.
ECB Releases Results of Bank Lending Survey for Fourth Quarter of 2020
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
ESAs Publish Reporting Templates for Financial Conglomerates
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.
