HKMA issued the revised version (Version 3) of the Supervisory Policy Manual module LM-1 on the regulatory framework for supervision of liquidity risk, as a statutory guideline under the Banking Ordinance. The revised module incorporates regulatory requirements consequential to the commencement of the Banking (Liquidity) (Amendment) Rules 2019 and reflects latest developments in the Basel III liquidity standards.
The revised policy module is a statutory guideline on the regulatory framework adopted by HKMA for supervising liquidity risk at authorized institutions. It offers guidelines with respect to liquidity-related disclosures and sets out the approach of HKMA in assessing authorized institutions’ compliance with the statutory liquidity requirements, including the liquidity coverage ratio (LCR), the liquidity maintenance ratio, the net stable funding ratio (NSFR), and the core funding ratio. In its risk-based supervision, HKMA conducts offsite analysis of the liquidity positions of an authorized institution. The information required for analysis is primarily obtained through regular submissions of these returns:
- Return on Liquidity Position of an Authorized Institution (MA(BS)1E)
- Return on Stable Funding Position of an Authorized Institution (MA(BS)26)
- Return on Intraday Liquidity Position of an Authorized Institution (MA(BS)22)
- Return on Liquidity Monitoring Tools (MA(BS)23)
- Return on Selected Data for Liquidity Stress-Testing (MA(BS)18)
This revised module should be read in conjunction with the the Banking (Liquidity) Rules, the Code of Practice under §97M of the Banking Ordinance, the Completion Instructions for Returns MA(BS)1E and MA(BS)26, LM-2, and other relevant supervisory documents that may be issued by HKMA.
Keywords: Asia Pacific, Hong Kong, Banking, Liquidity Risk, LCR, NSFR, Supervisory Policy Manual, Banking Liquidity Rules, Reporting, Disclosures, Basel, HKMA
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.