OSFI finalized Guideline B-6 on the principles for the management of liquidity risk. The guideline sets out the OSFI expectations about the management of liquidity risk for banks, bank holding companies, and federally regulated trust and loan companies. Guideline B-6, which was last updated in 2012, describes some of the elements that will be considered by supervisors in assessing the strength of the liquidity risk management framework of an institution and describes some of the information that will be used to assess liquidity adequacy, as appropriate to the scale, complexity, and function of the institution. The final guideline will take effect on January 01, 2020.
Along with the Liquidity Adequacy Requirements (LAR) Guideline, which outlines a set of quantitative liquidity standards and metrics, Guideline B-6 forms the framework under which OSFI assesses the liquidity adequacy of the institutions it supervises. The revisions aim to ensure that the guideline remains current and relevant as well as appropriate for the scale and complexity of institutions. As a result of the supervisory assessments of OSFI, the updated guidance includes additional clarity on the expectations of OSFI regarding the liquidity risk management practices of institutions. The revisions also relate to the new liquidity risk measurement tools that have been introduced in the LAR Guideline in recent years—such as the Liquidity Coverage Ratio, the Net Stable Funding Ratio minimum standards, and the Net Cumulative Cash Flow metric—and were not earlier referenced in Guideline B-6. The appendix provides a summary of comments received from the public consultation and outlines the OSFI responses to these comments. The objective of the revised Guideline B-6 is to ensure that the expectations contained in the guideline for managing liquidity risk at institutions remain sound and current as well as appropriate for the scale and complexity of institutions.
Effective Date: January 01, 2020
Keywords: Americas, Canada, Liquidity Risk, Guideline, Liquidity Principles, Basel III, OSFI
Previous ArticleRegulatory Authorities Remark on IAIS Reforms for Insurance Sector
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.