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Wednesday, May 21, 2014

ABA, Groups Seek Extension of LCR Daily Reporting Deadline

ABA and several trade groups asked the banking agencies to extend the deadline for daily calculations under their proposed Liquidity Coverage Ratio, one of two Basel III liquidity standards. Under the proposal, subject banks will be required to calculate their LCRs daily beginning January 1, 2015.

The groups also asked the agencies to notify banks as early as possible if an extension is offered, “thus allowing them to allocate limited resources appropriately among a growing number of competing regulatory priorities.”

A delay in the daily reporting requirement would not mean banks are unable to monitor their liquidity positions, the groups said.

Banking organizations … currently conduct regular and robust monitoring, reporting, and forecasting of liquidity positions and indicia of liquidity risk. However, these existing liquidity monitoring systems and related reports, even where available on a daily basis, are not currently tailored to the detailed requirements contained in the [LCR] proposal.

Under the proposed ratio, internationally active banking organizations with over $250 billion in assets and certain subsidiaries would have to hold high-quality liquid assets against the largest “net cumulative cash outflow as of the end of the 30-day period.” A modified LCR would apply to holding companies with $50 billion in assets or more that are not internationally active, requiring banks to hold HQLA based on a 21-day stress scenario.

Read the letter.

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