BCBS consults on Liquidity Coverage Ratio

The Basel Committee on Banking Supervision (BCBS) has published a
consultation paper on Liquidity Coverage Ratio (LCR) disclosure
standards.  It is considered that public disclosure improves transparency,
reduces uncertainty in the markets and strengthens market discipline.  It
is important that banks adopt a common disclosure framework to help market
participants consistently assess the liquidity risk position of banks.

 The BCBS has agreed that internationally active banks across Basel member
jurisdictions will be required to publish their LCR according to a common
template.

The disclosure requirements set out:

• requirements on the scope of application, implementation date, and the frequency and location of reporting.  Banks must publish disclosures with the same frequency as and concurrently with the publication of their financial statements, irrespective of whether the financial statements are audited;
• requirements for the disclosure of LCR and include a common template that banks must use to report their LCR results and select details of the LCR components.  Data must be presented as simple averages of daily observations over the previous quarter.  With both un-weighted and weighted values of the LCR being disclosed; and
• additional guidance on other information that banks may choose to disclose in order to facilitate understanding and awareness of their internal liquidity risk measurement and management.

Comments are requested by 14 October 2013.

 Related Link:

http://www.bis.org/publ/bcbs259.pdf