Liquidity Standards

This week the FSA published PS09/16 (‘Strengthening liquidity standards’) which, for the immediate future, should be the final word on liquidity following three Consultation Papers.

The liquidity requirements are contained in a new BIPRU chapter (BIPRU 12). Fortunately the regime for ‘non-ILAS’ firms (basically BIPRU limited licence; BIPRU limited activity; and ‘smaller’ full-scope BIPRU investment firms) is lighter than for those firms that fall under the category of ‘Standard ILAS’ firms.

BIPRU 12 comes into force on 1 December 2009, although various transitional provisions will mean that some sections are delayed until November next year. All BIPRU firms will eventually be required to comply with the overall liquidity adequacy rule (BIPRU 12.2.1) and the overarching liquidity systems and controls requirements (BIPRU 12.3.4). Non-ILAS firms will be required to submit a new data form – FSA055 – on an annual (calendar year) basis. The first submission will be for the year to 31.12.10.

We will be sending Complyport clients an analysis of PS09/16, including a short summary of what this all means for a typical non-ILAS firm.