Financial Trades Call on Federal Reserve to Clear Up Ambiguities in Liquidity Reporting Proposal and Provide Adequate Time to Implement Changes

BPI, SIFMA, ABA, FSF and IIB this week urged the Federal Reserve to clarify several areas of the proposed liquidity reporting changes that would be used to help monitor the liquidity positions of large, globally interconnected banks. The Fed’s proposed revisions to the Complex Institution Liquidity Monitoring Report are meant to capture details of banks’ funding flows that impact a long-term liquidity risk measure, the recently finalized Net Stable Funding Ratio (NSFR). Banks must comply with the NSFR, a regulatory liquidity measure requiring banks to hold adequate stable funding to support their assets, commitments and derivatives exposures over a one-year time horizon, beginning on July 1, 2021. However, the proposed changes far exceed the scope of those required by the NSFR, the trades wrote in a comment letter filed May 27. Also, the Fed’s data-reporting changes will likely be finalized close to the NSFR effective date, leaving banks insufficient time to make the necessary and significant changes to their reporting systems.