GFMA Comments on BCBS Global Liquidity Standards

Release Date: 7 January 2013

Contact:  James White, +44 (0)20 7743 9367, james.white@gfma.org 
                Andrew DeSouza, +1 202 962 7390, adesouza@gfma.org

GFMA Comments on BCBS Global Liquidity Standards  

 LONDON, 7 January 2013 — Commenting on the announcement by the Basel Committee on Banking Supervision (BCBS), Simon Lewis, chief executive at the Global Financial Markets Association (GFMA) said: “GFMA welcomes the decision by the BCBS to recognise that in practice there is a range of assets that can provide liquidity and the agreement reached should help to ensure there are not over-concentrations in eligible assets. GFMA welcomes especially the commitment from the BCBS to allow the inclusion of some forms of high quality securitisation to be eligible for inclusion in the buffer and has noted the strong performance of many of these assets during the crisis.

“In addition, GFMA notes the more realistic run-off rates that have been assigned to corporate deposits and calls for greater clarity in relation to the operational requirements surrounding the use of the liquid assets buffer. In the meantime, giving banks more time to phase in the Liquidity Coverage Ratio is a pragmatic response to the need to balance creating a safer financial system with enabling banks to support a robust economic recovery.

“Several concerns have been raised in relation to the Net Stable Funding Ratio in its current form, and GFMA welcomes as well the decision to review this proposal.

“More widely, GFMA considers that the LCR and a standard based over a longer timeframe could provide useful indicators of liquidity risk but that they should not be viewed as a substitute for adequate supervision. This should include the holistic assessments of firms’ liquidity risk by supervisors on a case by case basis rather than an over-reliance on one-size fits all measures.”

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 Notes:
1.  The Global Financial Markets Association (GFMA) brings together three of the world’s leading financial trade associations to address the increasingly important global regulatory agenda and to promote coordinated advocacy efforts. The Association for Financial Markets in Europe (AFME) in London and Brussels, the Asia Securities Industry & Financial Markets Association (ASIFMA) in Hong Kong and the Securities Industry and Financial Markets Association (SIFMA) in New York and Washington are, respectively, the European, Asian, and North American members of GFMA. For more information, visit http://www.gfma.org