Featured Product

    OSFI Proposes to Amend the Liquidity Adequacy Requirements for Banks

    February 08, 2019

    OSFI proposed revisions to the Liquidity Adequacy Requirements (LAR) Guideline for banks. OSFI published the proposed drafts (with proposed changes highlighted in yellow) of Chapters 1,2, 4, and 5 of the LAR guideline. The comment period on this consultation ends on March 15, 2019. With the final version of the guideline, OSFI also plans to post a non-attributed summary of the comments received along with its responses to those comments. OSFI is targeting January 01, 2020 for implementation of the proposed revisions to the LAR guideline.

    LAR guideline provides a framework for assessing the liquidity adequacy of banks, bank holding companies, federally regulated trust and loan companies and cooperative retail associations. In May 2014, OSFI issued LAR Chapter 2 (Liquidity Coverage Ratio (LCR)), which came into force as of January 01, 2015, along with several other liquidity monitoring tools. With these proposed revisions, OSFI aims to ensure that the LAR Guideline remains comprehensive and current with respect to identifying and monitoring liquidity risk of the institutions it regulates. Specifically, draft Chapters 2 and 4 introduce revisions to the treatment of less stable retail deposits that further distinguish between certain types of deposits that exhibit higher risk of withdrawal. Chapter 5 introduces an additional liquidity monitoring tool, the Liquidity Activity Monitor (LAM), which collects frequent and timely key account balances from select institutions and is designed to improve the ability to monitor changes in the institutions’ funding components.

    Since the financial crisis of 2008, liquidity risk management has continued to be a key area of focus for deposit-taking institutions and supervisors. The deposit-taking institutions are expected to have a liquidity risk management framework that, among other things, ensures they maintain sufficient liquidity to withstand a stressed environment. The LAR Guideline defines and assigns run-off rates to various categories of funding, according to the degree to which those sources of funding would be at risk under stress conditions. Since the Liquidity Coverage Ratio (LCR) and Net Cumulative Cash Flow (NCCF) were first issued in 2014, deposit-taking institutions’ funding models and deposit product offerings have continued to evolve. Given these developments, OSFI has reassessed the assumptions built into its regulatory liquidity metrics, particularly those related to the stability of funding sources, to ensure that the metrics remain appropriate in maintaining a resilient banking sector. With the final version of the guideline, OSFI will also post a non-attributed summary of comments received along with its responses. 

     

    Related Links

    Comment Due Date: March 15, 2019

    Keywords: Americas, Canada, Banking, Liquidity Risk, LAR Guideline, ALMM, Liquidity Activity Monitor, OSFI

    Related Articles
    News

    BCBS Amends Guidelines on Sound Management of AML/CFT Risks

    BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).

    July 02, 2020 WebPage Regulatory News
    News

    US Agencies Finalize Amendments to Swap Margin Rule

    US Agencies (Farm Credit Administration, FDIC, FED, FHFA, and OCC) finalized changes to the swap margin rule to facilitate implementation of prudent risk management strategies at banks and other entities with significant swap activities.

    July 01, 2020 WebPage Regulatory News
    News

    PRA Letter Sets Expectations on Approach to Managing Climate Risks

    PRA published a letter that builds on the expectations set out in the supervisory statement (SS3/19) on enhancing banks' and insurers' approaches to managing the financial risks from climate change.

    July 01, 2020 WebPage Regulatory News
    News

    EBA Guidelines on Treatment of Structural Foreign Exchange Under CRR

    EBA finalized the guidelines on treatment of structural foreign-exchange (FX) positions under Article 352(2) of the Capital Requirements Regulation (CRR).

    July 01, 2020 WebPage Regulatory News
    News

    FSB Issues Statement on Impact of COVID-19 Crisis on Benchmark Reform

    FSB published a statement on the impact of COVID-19 pandemic on global benchmark transition.

    July 01, 2020 WebPage Regulatory News
    News

    IAIS Publishes List of Internationally Active Insurance Groups

    IAIS published the list of Internationally Active Insurance Groups (IAIGs) publicly disclosed by group-wide supervisors.

    July 01, 2020 WebPage Regulatory News
    News

    FED Temporarily Revises FR Y-9C With Respect to PPPLF and CARES Act

    FED has temporarily revised the reporting form on consolidated financial statements for holding companies (FR Y-9C; OMB No. 7100-0128).

    July 01, 2020 WebPage Regulatory News
    News

    EC Launches Consultation on Review of Solvency II Directive

    EC launched a consultation on the review of the key elements of Solvency II Directive, with the comment period ending on October 21, 2020.

    July 01, 2020 WebPage Regulatory News
    News

    ECB Consults on Supervisory Approach to Consolidation in Banking

    ECB launched a consultation on the guide that sets out supervisory approach to consolidation projects in the banking sector.

    July 01, 2020 WebPage Regulatory News
    News

    IAIS on Package for 2020 Data Collection on ICS and Aggregation Method

    IAIS published technical specifications, questionnaires, and templates for 2020 Insurance Capital Standard (ICS) and Aggregation Method data collections.

    June 30, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5425