Featured Product

    HKMA Consultation on Framework for Supervision of Liquidity Risk

    November 04, 2019

    HKMA issued a consultation on Supervisory Policy Manual module LM-1 on the regulatory framework for supervision of liquidity risk. This module provides guidance to authorized institutions on the application of the Banking (Liquidity) Rules, or BLR, and sets out the approach HKMA will take in assessing the compliance of authorized institutions with the statutory liquidity requirements.

    HKMA requires each institution to maintain adequate liquidity in compliance with the minimum requirements on the statutory liquidity ratios (whichever is applicable) and to put in place sound systems and controls for the management of liquidity risk. The Banking (Liquidity) Rules under §97H(1) prescribe the requirements in respect of:

    • Liquidity Coverage Ratio (LCR), which is applied to authorized institutions designated by HKMA as “category 1 institutions”
    • Liquidity Maintenance Ratio (LMR), a local liquidity standard developed by HKMA for application to all other authorized institutions that are not designated as category 1 institutions and which are referred to as “category 2 institutions”
    • Net Stable Funding Ratio (NSFR), which has the same scope of application as the LCR (that is, category 1 institutions)
    • Core Funding Ratio (CFR), a modified version of the NSFR developed by HKMA for application to certain category 2 institutions that are designated as “category 2A institutions”

    Authorized institutions are also expected to observe any other supervisory requirements specified by HKMA from time to time to enhance liquidity risk management. HKMA adopts a risk-based supervisory approach to monitor liquidity positions of authorized institutions and assess the soundness of their liquidity risk management systems and controls through a combination of supervisory actions, including (but not limited to) risk-focused off-site reviews, on-site examinations, and prudential meetings.

    Keywords: Asia Pacific, Hong Kong, Banking Liquidity Risk, LCR, NSFR, Supervisory Policy Manual, Banking Liquidity Rules, HKMA

    Featured Experts
    Related Articles
    News

    BIS Examines Use of Big Data and Machine Learning at Central Banks

    BIS published a paper that provides an overview on the use of big data and machine learning in the central bank community.

    March 04, 2021 WebPage Regulatory News
    News

    APRA Finalizes Reporting Standard for Operational Risk Requirements

    APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.

    March 03, 2021 WebPage Regulatory News
    News

    ECB Publishes Guide for Determining Penalties for Regulatory Breaches

    ECB published a guide that outlines the principles and methods for calculating the penalties for regulatory breaches of prudential requirements by banks.

    March 02, 2021 WebPage Regulatory News
    News

    MAS Sets Out Good Practices to Manage Operational Risks Amid COVID

    MAS and The Association of Banks in Singapore (ABS) jointly issued a paper that sets out good practices for the management of operational and other risks stemming from new work arrangements adopted by financial institutions amid the COVID-19 pandemic.

    March 02, 2021 WebPage Regulatory News
    News

    ACPR Announces New Data Collection Application for Banks and Insurers

    ACPR announced that a new data collection application, called DLPP (Datalake for Prudential), for collecting banking and insurance prudential data will go into production on April 12, 2021.

    March 02, 2021 WebPage Regulatory News
    News

    BCB Maintains CCyB at 0%, Initiates First Cycle of Regulatory Sandbox

    BCB announced that the Financial Stability Committee decided to maintain the countercyclical capital buffer (CCyB) for Brazil at 0%, at least until the end of 2021.

    March 02, 2021 WebPage Regulatory News
    News

    EIOPA Launches Study on Non-Life Underwriting Risk in Internal Models

    EIOPA has launched a European-wide comparative study on non-life underwriting risk in internal models, also kicking-off of the data collection phase.

    March 01, 2021 WebPage Regulatory News
    News

    SRB Publishes Overview of Resolution Tools Available in Banking Union

    SRB published an overview of the resolution tools available in the Banking Union and their impact on a bank’s ability to maintain continuity of access to financial market infrastructure services in resolution.

    March 01, 2021 WebPage Regulatory News
    News

    EBA Consults on Pillar 3 Disclosure Standards for ESG Risks Under CRR

    EBA is consulting on the implementing technical standards for Pillar 3 disclosures on environmental, social, and governance (ESG) risks, as set out in requirements under Article 449a of the Capital Requirements Regulation (CRR).

    March 01, 2021 WebPage Regulatory News
    News

    ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting

    ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting

    March 01, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6655