On 6 August 2014, the Monetary Authority of Singapore (the "MAS") issued a consultation paper seeking comments on a draft new MAS Notice which will introduce a new liquidity requirement framework for banks, finance companies and merchant banks (collectively referred to as the "Institutions"). The new framework will implement the Basel III liquidity coverage ratio ("LCR") rules, the minimum standard for liquidity risk endorsed by the Group of Central Bank Governors and Heads of Supervision. Comments on the draft MAS Notice must be submitted to the MAS by 5 September 2014.
This consultation follows an earlier consultation conducted by the MAS between 16 August 2013 and 16 September 2013 which proposed to replace the existing minimum liquid assets ("MLA") framework with the LCR framework. On 6 August 2014, in a document titled "Response to Feedback: Consultation on Local Implementation of Basel III Liquidity Rules - Liquidity Coverage Ratio", the MAS set out the revised features of the local liquidity requirement framework to be implemented after taking into account industry feedback on its original proposals.
Key features of liquidity requirement framework
The MAS will adopt a two-tier liquidity requirement framework. Institutions and their related entities which are assessed by the MAS to be systemically important in Singapore ("D-SIBs") will be required to adopt the LCR framework to ensure that they have sound liquidity risk management. Smaller Institutions whose operations in Singapore are much simpler than the larger Institutions will be given a choice to comply with either the LCR or a modified MLA framework. A summary of the new liquidity requirements and the implementation timeline for these requirements are set out in the table below.
Click here to view table.
Details of the liquidity requirement framework and the corresponding reporting forms are set out in the draft MAS Notice.
Between 25 June and 25 July 2014, the MAS consulted on the proposed framework for D- SIBs and intends to publish the initial list of D-SIBs in early 2015.
Please click here for the "Consultation Paper on Local Implementation of Basel III Liquidity Rules - Liquidity Coverage Ratio" which sets out the draft MAS Notice. The document is available from the MAS website www.mas.gov.sg.