AMF updated the guidelines on liquidity and solvency requirements. Under liquidity requirements, AMF updated liquidity adequacy guideline for financial services cooperatives and credit unions that are not members of a federation, trust companies, and savings companies. Under solvency requirements, AMF updated the capital adequacy guideline for credit unions that are not members of a federation, trust companies, and savings companies. AMF also published the Pillar 3 disclosure requirements guideline for financial service cooperatives, credit unions that are not members of a federation, trust companies, and saving companies. In Pillar 3 disclosure requirements guideline, AMF has reproduced and adapted paragraphs from the Revised Pillar 3 disclosure requirements published by BCBS. The guidelines became effective from January 01, 2020.
Liquidity Adequacy Guideline—To provide financial institutions with consistent oversight standards that are comparable with international standards established in respect of liquidity requirements, AMF incorporates the provisions of BCBS in this guideline. These provisions contain the methodologies underlying a series of liquidity measures that will be used by AMF to assess the adequacy of liquidity of a financial institution. Thus, the use of these indicators will allow AMF to appreciate the adequacy of an institution's liquidity position. This guideline covers multiple quantitative liquidity measures including the liquidity coverage ratio (LCR), the net stable funding ratio (NSFR), a set of intraday liquidity monitoring tools, and other liquidity monitoring tools.
Capital Adequacy Guideline—This guideline sets out the capital standards on which AMF relies to assess whether a credit union or company maintains sufficient capital to ensure sound and prudent management under applicable laws. It contains the requirements pertaining to the simpler approaches under the Basel II framework, that is, the standardized approach to credit risk and the basic indicator approach and standardized approach to operational risk. It does not include specific requirements for market risk. However, if AMF considers that trading has become a more significant part of the activities of the target financial institutions, AMF may revisit the capital adequacy requirements to take into consideration the effect of market risk on the risk profile of these establishments.
Effective Date: January 01, 2020
Keywords: Americas, Canada, Quebec, Banking, Liquidity Requirements, Solvency Requirements, Liquidity Adequacy, Capital Adequacy, Pillar 3, Disclosures, AMF
Previous ArticleSRB Publishes Presentations from Ninth Industry Dialog
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).
The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.
The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.
The Bank for International Settlements (BIS) published bulletins on lending in decentralized finance (DeFi) system, on blockchain scalability and fragmentation of crypto, and on extractable value and market manipulation in crypto and decentralized finance.
The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.