Featured Product

    US Agencies Issue Interim MMLF Rule, FED Updates FR Y-14 Forms

    In an effort to mitigate the impact of economic disruptions due to the COVID-19 outbreak, Money Market Mutual Fund Liquidity Facility (MMLF) was launched in the US to enhance the liquidity and functioning of money markets and to support the economy. To this end, US Agencies (FDIC, FED, and OCC) are adopting an interim final rule to allow banking organizations to neutralize the regulatory capital effects of participating in the Money Market Mutual Fund Liquidity Facility (MMLF). This treatment would extend to the community bank leverage ratio. This rule impacts the three FFIEC Call Reports and the FR Y-9C. The interim final rule is effective on March 23, 2020. Comments on the interim final rule must be received no later than May 07, 2020. FED also posted updated reporting forms and instructions for monthly and quarterly capital assessments and stress testing reports (FR Y-14M/Q). Additionally, FED published supporting statement for the reporting, recordkeeping, and disclosure requirements associated with Regulation WW, Regulation Q (FR Q), and Regulation VV (FR VV).

    The interim final rule modifies the agencies' capital rules so that financial institutions receive credit for the low risk of their MMLF activities, reflecting the fact that institutions would be taking no credit or market risk in association with such activities. The change only applies to activities with the MMLF. To provide liquidity to the money market sector to help stabilize the financial system, FED authorized the Federal Reserve Bank of Boston to establish the MMLF. Under the MMLF, the Federal Reserve Bank of Boston will extend non-recourse loans to eligible financial institutions to purchase certain types of assets from money market mutual funds. A banking organization that participates in the MMLF could potentially be subject to increased capital requirements. The agencies have determined that the current leverage and risk-based capital requirements for the assets acquired by a banking organization as part of the MMLF do not reflect the substantial protections provided to the organization by the Federal Reserve Bank of Boston in connection with the facility.

    The agencies believe that it would be appropriate to exclude the effects of purchasing assets through the MMLF from the regulatory capital of a banking organization. This interim final rule would permit banking organizations to exclude non-recourse exposures acquired as part of the MMLF from a banking organization's total leverage exposure, average total consolidated assets, advanced approaches-total risk-weighted assets, and standardized total risk-weighted assets, as applicable. The agencies seek comment on all aspects of the interim final rule. The interim final rule affects the agencies' current information collections for the Call Reports FFIEC 031, FFIEC 041, and FFIEC 051. The changes to the Call Reports and their related instructions will be addressed in a separate Federal Register notice. Similarly, FED will address corresponding changes to the information collected on the FR Y-9C as part of a separate Federal Register notice.

     

    Related Links

    Comment Due Date: March 23, 2020

    Effective Date: May 07, 2020

    Keywords: Americas, US, Banking, Reporting, Regulatory Capital, MMLF, Call Reports, FR Y-9C, FR Y-14, Credit Risk, Market Risk, Liquidity Risk, Stress Testing, CBLR Framework, COVID-19, Boston FED, US Agencies

    Featured Experts
    Related Articles
    News

    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.

    May 20, 2020 WebPage Regulatory News
    News

    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.

    May 20, 2020 WebPage Regulatory News
    News

    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.

    May 20, 2020 WebPage Regulatory News
    News

    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.

    May 20, 2020 WebPage Regulatory News
    News

    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).

    May 20, 2020 WebPage Regulatory News
    News

    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.

    May 20, 2020 WebPage Regulatory News
    News

    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.

    May 19, 2020 WebPage Regulatory News
    News

    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.

    May 19, 2020 WebPage Regulatory News
    News

    FINMA Adjusts Deadlines for COVID-19 Relief Measures for Banks

    FINMA published guidance (06/2020) on extending or discontinuing various exemptions that were granted due to the COVID-19 crisis.

    May 19, 2020 WebPage Regulatory News
    News

    SRB Consults on Standardized Data Set for Bank Valuation in Resolution

    SRB launched a consultation on the minimum data needed for valuation of a bank in resolution.

    May 19, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5203