View more on these topics

FSA overhauls banks’ liquidity requirements

The FSA has today published a consultation paper proposing an overhaul of the liquidity requirements for banks, building societies and investment firms.

The regulator proposes firms will need enhanced liquidity risk management capabilities including greater use of stress testing and improved contingency funding plans.

They will also have to be less reliant on short term wholesale funding, including that from foreign counterparties and there will be greater incentives for firms to attract a higher proportion of retail time deposits.

The paper also proposes that firms will have a higher amount and quality of liquid asset stocks including a greater proportion held as government debt.

Banks will also need to keep a check on unsustainable expansion of bank lending during favourable economic times.

The proposed rules are based on recently agreed international liquidity standards, in particular the Basel Committee on Banking Supervision’s Principles for Sound Liquidity Risk Management and Supervision.

FSA director of wholesale and prudential policy Paul Sharma says: “We are pleased with the way in which the industry has engaged with us on this issue.

These new proposals take on board the feedback we have received to last year’s discussion paper 07/7 as well as the lessons both we and firms have learned from the recent market volatility.

“We have put forward a robust set of proposals that we believe will greatly improve firms’ ability to deal with liquidity risks and thereby increase the overall stability of the UK financial markets. This builds on the international work on liquidity that is currently in train.”

As part of the CP the FSA is also pre-consulting on the reporting requirements for the new liquidity regime. The consultation period runs for a month and the FSA will then look to issue a separate reporting CP in Q1 2009.

The consultation period closes on March 4 2009. The FSA hopes to introduce new rules in October 2009.


FTSE slips below 4,000

The FTSE 100 has slipped below the 4,000 level after opening 46 points lower at 4,019.18 on Monday’s close of 4,065.49.

Partied out and penniless

December has left me destitute. My piggy bank lies broken and empty, my lunchtime meal deal feels like an extravagant expense and I’m down to the Bountys in my box of Celebrations. But I won’t mourn my dearly departed pennies. Between buying gifts for loved ones (then deciding to keep them for myself) to treating […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm