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FSA to delay liquidity paper, says BDO

The FSA may delay its ruling on its Strengthening Liquidity Standards consultation paper until Q4 this year, according to BDO Stoy Hayward.

Initially the FSA was due to release its feedback statement in April with the rules to be implemented by October 2009. But BDO says it is now likely that the rules will only be implemented “well into 2010”.

The paper proposes requirements for banks, building societies and investment firms to develop individual liquidity risk assessments which will need to be reviewed, assessed, documented and stress-tested.

In addition, firms will be required to hold a reserve of highly liquid and high quality assets to act as an additional defence for firms.

BDO head of the financial services regulatory practice Fiona Raistrick says: “As this was one of the key elements highlighted in the Turner Review just a week ago, we were surprised to hear the FSA is considering delaying the rules until the end of the year.

“We would question why the delay is required and more importantly, what the FSA is planning on adding to the requirements that warrant such a delay.”

But Cicero director Iain Anderson says the delay makes “complete sense”.

He says: “Clearly what is being unleashed by Turner and De Larossiere in Europe has to be linked together with the overall shape of regulation. Strategically it makes sense.”

The FSA was unavailable for comment.

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