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CRD IV: Liquidity Update 2015

CRD IV Update: Liquidity Coverage Requirement (LCR)

20 July 2015

The PRA has today issued a Supervisory Statement (SS 29/15) covering Interim Liquidity Coverage Requirement (LCR) Reporting under CRD IV.

• CRD IV: Interim LCR Reporting - SS 29/15

Firms are expected to report their Liquidity Coverage Requirement positions in accordance with this Supervisory Statement so that the PRA is able to monitor a firm’s compliance with the LCR and their liquidity resilience from the effective date of 1st October 2015 and before the introduction of the new LCR return following adoption by the EC.

Last month (8th June 2015), also saw the PRA issue a Policy Statement entitled CRD IV: Liquidity (PS 11/15) that sets out the PRA’s final rules and supervisory statement on accommodating the European Commission’s delegated act with regard to the liquidity coverage requirement for credit institutions such as:

• UK banks,
• building societies
• PRA UK-designated investment firms;
• third-country firms that are banks or designated investment firms; and
• European Economic Area (EEA) credit institutions that have a branch in the United Kingdom

The PRA also provided feedback to the Consultation Paper on the same topic resulting in revisions to some of the regulator’s proposals, such as:

• The regulator will no longer specify a rule requiring firms to be able to comply with daily reporting against the whole range of COREP liquidity returns. Alternatively the PRA will apply this liquidity requirement through a supervisory expectation and will only expect firms to be able to provide daily reporting for a sub-set of the returns.
• Third-country branches will not be required to provide whole-firm liquidity information through COREP returns and the regulator will determine the specific format for required returns in due course
• The period that the FSA returns will run in parallel to the COREP Liquidity Coverage Requirement (LCR) returns has been reduced. As such, FSA054 will not be required past 1st October 2015 and FSA050 and FSA053 will not be required after 1st October 2015 or when their equivalent Additional Monitoring Metrics (AMMs) return is received, whichever is later.

The PRA’s Supervisory Statement (SS 24/15) also from 8th June 2015  sets out the regulator’s approach to supervising liquidity and funding risks and covers the PRA’s expectations in relation to:

• the Internal Liquidity Adequacy Assessment Process (ILAAP);
• the Liquidity Supervisory Review and Evaluation Process;
• drawing down Liquid Asset Buffers;
• collateral placed at the Bank of England; and
• daily reporting under stress

The majority of the PRA’s rules and supervisory statement  on Liquidity Coverage Requirement (LCR) Reporting under CRD IV take effect from 1st October 2015.

Compound Growth can help your firm  keep up to date with the latest Regulatory News and Compliance Updates:

• All News & Updates
• Spread Betting Firms
• EMIR Updates
• CRD IV
• Client Money
• Best Execution
• Market Abuse

Additional CRD IV Resource Links:

2015:             PRA: CRD IV Updates 2015

20/07/2015:   CRD IV: Interim LCR Reporting - SS 29/15

08/06/2015:   CRD IV: Liquidity (PS 11/15)

08/06/2015:   CRD IV: The PRA’s Approach to Supervising Liquidity and funding risks (SS 24/15)

13/02/2015:   Regulatory Data for CRD Firms

CRD IV Assistance

Our team is experienced in assisting a variety of firms with CRD IV such as their COREP and regulatory reporting requirements. Contact us to find out more.