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    FINMA Consults on Changes to Circular on Liquidity Risks for Banks

    May 04, 2020

    FINMA issued a consultation on amendments to the circular (2015/2) on liquidity risks for banks. The amendments relate to the technical implementing provisions and refinements to the new requirements for net stable funding ratio (NSFR), as set out in the Liquidity Ordinance. FINMA is introducing general adjustments to the qualitative requirements and to the liquidity coverage ratio (LCR), constituting clarifications and editing changes to the previous regulation. The consultation takes into account the timetable for adoption of the Liquidity Ordinance. The consultation period will run until July 13, 2020 while the corresponding changes are due to enter into force on July 01, 2021.

    In November 2019, the Swiss Federal Council had decided to introduce NSFR for banks by mid-2021 and to make the corresponding adjustments to the Liquidity Ordinance. This also necessitated changes to the FINMA supervisory practice, as set out in the circular (2015/2) on liquidity risks for banks. As required in the Basel III minimum standards, banks must meet stricter liquidity requirements and fulfill internationally harmonized funding requirements. The Federal Council had adapted the Liquidity Ordinance in 2017 in line with these international rules, but had postponed the introduction of NSFR. FINMA had also adjusted the circular on liquidity risks for banks at that time and ran a consultation exercise. The present consultation, therefore, only concerns a number of clarifications and editing changes. 

     

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    Comment Due Date: July 13, 2020

    Effective Date: July 01, 2021

    Keywords: Europe, Switzerland, Banking, LCR, NSFR, Liquidity Risk, Liquidity Ordinance, Circular 2015/2, Basel III, Swiss Federal Council, FINMA

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