OSFI has issued the final version of its Liquidity Adequacy Requirements guideline for banks, as part of the new Basel III capital regime.
The group says the document helps explain liquidity-related requirements issued by the Basel Committee on Banking Supervision (BCBS), as well as transposes those requirements into official OSFI guidance.
Over the last couple years, the BCBS has released the following documents.
- In January 2013, it issued Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools, which outlined the liquidity coverage ratio (LCR) minimum standard, as well as a series of liquidity-monitoring tools for supervisors.
- In April 2013, the BCBS released Monitoring tools for intraday liquidity management, which enabled both supervisors and payment and settlement systems overseers to monitor institutions’ intraday liquidity risk. They could also monitor banks’ abilities to meet payment and settlement obligations on a timely basis.
- In January 2014, it released Basel III: The Net Stable Funding Ratio, which listed proposed revisions to the original 2010 version of the same document.
In January 2015, the new LCR standard will be implemented, and institutions will also have to file data that supports some of the other liquidity monitoring tools.
So, the final LAR guideline will help banks meet requirements. It’s composed of six chapters, and the majority of the text incorporated into the guideline is sourced directly from the aforementioned Basel publications. However, it’s also supplemented with OSFI-created text boxes that offer additional clarity.
Consistent with other OSFI Guidelines, the contents of the LAR Guideline will be subject to an annual update, as required, to reflect both international and domestic developments. Draft versions of the chapters were issued for comment on November 29, 2013, so public comments were taken into account before the final release of the document.