HKMA Announces Finalization of Banking Liquidity Amendment Rules 2019

The BLAR amends the Banking (Liquidity) Rules. The key changes relate to recognition of the Basel-compliant listed ordinary shares and certain marketable debt securities issued by corporates, sovereigns, central banks, or public-sector entities as level 2B assets in calculating LCR of a category 1 institution ratio and as liquefiable assets in calculating the Liquidity Maintenance Ratio of a category 2 institution. The amendments also relate to the implementation of a required stable funding factor of 5% on total derivative liabilities (before adjustments) in calculating NSFR of a category 1 institution and a required core funding factor of 5% on total derivative liabilities (before adjustments) in calculating the core funding ratio of a category 2A institution. The BLAR 2019 also makes amendments to LCR provisions in the Banking (Liquidity) Rules to reflect the latest BCBS guidance on the eligibility of level 2B assets.

Effective Date: January 01, 2020

Keywords: Asia Pacific, Hong Kong, Banking, BLAR, Basel III, LCR, NSFR, Liquidity Risk, Liquidity Maintenance Ratio, HKMA