FSA postpones tougher liquidity requirements
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The Financial Services Authority says it will delay introducing stricter liquidity requirements for firms until the economic recover is assured.
The FSA published its enhanced liquidity regime in October 2009 which introduced both tougher qualitative and quantitative standards for firms.
At that stage the FSA said that it would not tighten quantitative standards before economic recovery is assured given that all firms were experiencing a market-wide stress.
The FSA committed to giving a further update in Q1 of 2010.
The regulator now believes that it would be premature to increase liquidity requirements across the industry at the current time.
It will review this later in the year with a further announcement in Q4, 2010.
In the meantime, the FSA says it is continuing to work with firms that are most affected by the new regime focusing on the steps they are taking to mitigate liquidity risk and on the additional impact of our progressively tightening quantitative requirements.
The FSA is also actively contributing to the international debate on liquidity.
