Intraday liquidity position of a firm
But here is the confusing thing, how much pain or gain? How can that be? There is little information available in the public domain as to individual regulator timetables and their detailed requirements, so defining the regulatory landscape is more of an art than a science.
Often the regulator will build up the BCBS pressure on firms in private, but I am already aware of two territories where banks are being asked to report by the end ofand I am sure that more will move in the next few months:. This can actually be a much more powerful lever for the regulators than BCBS compliance, as it means the bank must know its intraday indicators in real-time rather than weeks after the event!
I would include the following territories as falling into this category, although how aggressively the regulator utilises this lever is open to debate, it appears to vary by bank within a particular territory. The position in the US is a little mixed, there is very little said in public about the BCBS regime currently, but the Fed is certainly putting significant pressure on the biggest banks to improve intraday capabilities. And the rumour on the street is that during the Fed put out formal guidance on BCBS and how they will implement the regime.
The story in Europe is frustrating to those who want regulatory support to drive intraday improvements. Up until recently the EBA appeared to be moving to a drive for compliance across the bulk of Europe. But then budget pressures forced their intraday regime into their work programme. Expect other territories to follow the UK PRA, by implementing temporary arrangements while waiting for a Europe-wide common approach.
Unless there is a major about-turn, then all regulators will adopt BCBS, not just those mentioned above. It is just a question of when. So wherever the bank is regulated, there will be no hiding place.
And one thing that is for sure, once your regulator fires that starting pistol, ignorance of the agenda will be a poor enough excuse for failing to hit the timetable. All banks have been aware of the regime for three years already, and should be on top of their intraday liquidity risks now as part of good management practice.
So far, all the regulators that have implemented their own interpretation of the requirements have stayed pretty close to the BCBS guidance. In my next post I will talk about the best regulatory guidance I have seen on BCBS, so practitioners can start to get on top of what they need to do next.
In the meantime, please give your thoughts below and, in particular, share insights into any other BCBSactive regulators that I might have neglected to mention. There are a handful of territories where the regulator requires BCBS monitoring today: Where else will BCBS become live in ?
Often the regulator will build up the BCBS pressure on firms in private, but I am already aware of two territories where banks are being asked to report by the end ofand I am sure that more will move in the next few months: Where are regulators focusing on intraday liquidity without pushing BCBS? Who deserves a special mention? What does all this mean?