SBS Opens Public Consultation Process for Bill Modifying Regulation on Liquidity Risk Management: Central Bank Issues General Regulation on Exchange and Clearing Services
3 enero 2020

On December 27, the Superintendency of Banking, Insurance and AFPs (SBS for its acronym in Spanish) launched a public consultation on the bill modifying the Liquidity Risk Management Regulation. The aim is to improve the way in which companies manage their liquidity risks in the financial system and adapt their Liquidity Coverage Ratio (LCR) reporting and monitoring regulations to the international standards set by the Basel Committee on Banking Supervision. Interested parties may submit their comments through an electronic form until January 31, 2020.  

The revised LCR regulations purport to shore up the short-term resilience of the liquidity risk profile of supervised companies, ensuring that they maintain an adequate level of High Quality Liquid Assets (HQLA) which can be easily converted into cash to meet their liquidity needs within a period of thirty (30) calendar days.

Similarly, the bill establishes the operational requirements that the HQLA must meet:  

  • Be free of regulatory, contractual, legal or other restrictions affecting the company’s ability to speedily liquidate, sell, transfer or allocate the asset.
  • When the company is the acquirer and reports transactions, any securities listed as HQLA received in this transaction are considered to be HQLA as long as the acquiring company is legally and contractually entitled to use these securities, and these have not been used in another transaction.
  • If assets sold without being replaced within thirty (30) days after their liquidation lead to the cancellation of a hedge and/or open exposure, exceeding the company’s internal limits, these may not be considered HQLA.
  • When an asset ceases to be eligible for HQLA, the company may continue to treat it as HQLA for a period of no more than 30 calendar days.

In other news, the Central Bank of Peru has issued the General Regulations for Exchange and Compensation Services through Circular No. 0029-2019-BCRP, governing the authorization process for ESECs organisation and operation (these are corporations in charge of Check Clearing and Settlement Systems) and establishing general rules for services involving Available Instruments.