Liquidity risk management framework

Global regulatory regimes
The events of the last couple of years have highlighted just how inadequate existing liquidity management, measurement and reporting regimes have been. As a result of this, international regulatory bodies such as the Bank of International Settlements (BIS) and the Committee of European Banking Supervisors (CEBS) moved liquidity risk management and supervision higher up the global regulatory agenda and significant changes to existing liquidity regimes are underway.
The UK’s FSA enforced the first set of rules and strict deadlines set out in its Policy Statement ‘Strengthening capital standards’ (PS 09/16), but now more and more countries are following suit. (For further details of the UK liquidity requirements please visit out UK liquidity page.)
To effectively manage what is required, a robust liquidity risk management framework (i.e. strategy, policy and practices) that ensures sufficient liquidity has to be established. This includes the maintenance of a cushion of unencumbered, high quality liquid assets in order to withstand stress events, including those involving the loss or impairment of both unsecured and secured funding sources.
Proven liquidity solution
FRSGlobal combines a risk management / stress engine and regulatory reporting platform to enable firms to monitor, manage and report liquidity - as well as build and develop a library of stress tests in accordance with the regulators’ requirements. FRSGlobal’s liquidity solution is the only product on the market that offers a single platform from a single data source, providing “a single version of the truth”.
The solution is being increasingly adopted by firms and was ranked first for 'Completeness of offering in the Asset Liability Management  and Liquidity Marketplace' in the Chartis market analysis report - as it provides its customers with solutions for all aspects of the new liquidity regime.
The FRSGlobal liquidity solution can handle all the required financial products to produce the regulatory output as per the regulators’ requirements. It is capable of doing this in a straight-through-processing method if required, with the minimum amount of user input once the data has been loaded and validated. The FRSGlobal liquidity risk solution also has the ability to produce XML output and automatically submit reports to the regulators’ internal systems, such as the FSA’s GABRIEL system.

• Regulatory reporting: for firms to address new regulatory reports/data items for liquidity risk
• Risk analysis: firms can enter contracts into the system that can be used, re-used, “sliced & diced”, stress tested and shocked – to create cash flows to represent any scenario, and to provide information to both internal management and the regulator
• Stress testing: for firms to conduct regular stress tests in order to identify sources of potential liquidity strain and help fulfill systems and controls requirements
• Data management: for firms to source additional data for reporting requirements
• Dashboarding: the Liquidity solution includes full dashboarding capability at all levels, including C’level dashboards for ‘at a glance’ status information
• Management reporting: for firms to have a robust management framework in place

Put simply – FRSGlobal can automate everything from the submission of data to the production of reporting as and when the regulator requires.