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    AMF Guidelines on Liquidity, Solvency, and Disclosure Requirements

    November 26, 2019

    AMF updated the guidelines on liquidity and solvency requirements. Under liquidity requirements, AMF updated liquidity adequacy guideline for financial services cooperatives and credit unions that are not members of a federation, trust companies, and savings companies. Under solvency requirements, AMF updated the capital adequacy guideline for credit unions that are not members of a federation, trust companies, and savings companies. AMF also published the Pillar 3 disclosure requirements guideline for financial service cooperatives, credit unions that are not members of a federation, trust companies, and saving companies. In Pillar 3 disclosure requirements guideline, AMF has reproduced and adapted paragraphs from the Revised Pillar 3 disclosure requirements published by BCBS. The guidelines became effective from January 01, 2020.

    Liquidity Adequacy Guideline—To provide financial institutions with consistent oversight standards that are comparable with international standards established in respect of liquidity requirements, AMF incorporates the provisions of BCBS in this guideline. These provisions contain the methodologies underlying a series of liquidity measures that will be used by AMF to assess the adequacy of liquidity of a financial institution. Thus, the use of these indicators will allow AMF to appreciate the adequacy of an institution's liquidity position. This guideline covers multiple quantitative liquidity measures including the liquidity coverage ratio (LCR), the net stable funding ratio (NSFR), a set of intraday liquidity monitoring tools, and other liquidity monitoring tools.

    Capital Adequacy Guideline—This guideline sets out the capital standards on which AMF relies to assess whether a credit union or company maintains sufficient capital to ensure sound and prudent management under applicable laws. It contains the requirements pertaining to the simpler approaches under the Basel II framework, that is, the standardized approach to credit risk and the basic indicator approach and standardized approach to operational risk. It does not include specific requirements for market risk. However, if AMF considers that trading has become a more significant part of the activities of the target financial institutions, AMF may revisit the capital adequacy requirements to take into consideration the effect of market risk on the risk profile of these establishments.

     

    Effective Date: January 01, 2020

    Keywords: Americas, Canada, Quebec, Banking, Liquidity Requirements, Solvency Requirements, Liquidity Adequacy, Capital Adequacy, Pillar 3, Disclosures, AMF

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