Response to consultation on RTS to specify the minimum contents of the liquidity management policy and procedures under MiCA
Question 1. Do respondents have any concerns of Article 1 for the identification, measurement and monitoring of liquidity risk of issuers? Do respondents think that the main aspects in the processes for issuers of tokens to properly manage liquidity risk are captured?
We are supportive of the EBA’s proposal to apply the procedural requirements for identifying, measuring and managing liquidity risk based on a proportionate basis considering the complexity, risk profile and scope of operation of ART and EMT issuers.
Question 2. Do respondents have any comment on the minimum content of the liquidity contingency policy proposed in Article 2? In particular, do respondents have any concern on the inclusion of the required indicator to measure deviations between the market value of the token and the market value of the assets referenced as an early warning signal to be calibrated by the issuer?
We are supportive of the EBA’s overall approach to defining the content of the liquidity contingency policy. We would welcome additional clarity from the EBA that the development of the policy and related documentation by issuers is subject to the same proportionality principle as for Article 1 of the draft RTS – reflecting the complexity, risk profile, scope of operation of issuers.
The EBA has recalled that holders of ARTs and EMTs have a permanent right of redemption – meaning that the issuer has the obligation to redeem the tokens at any time and upon request by holders. However, the EBA has also recalled that issuers can fulfil this redemption request through payment in funds or in specie. We request that the EBA therefore clarifies that liquidity risk mitigation tools which could be included in strategies for addressing liquidity shortfalls in emergency situations could include the in specie redemption of holders (Article 2(4)(b)).
Question 3. Do respondents find any challenge in the application of the segregation of the liquidity management policy as envisaged in Article 3?
We do not have any comments on challenges in the application of segregation of liquidity management policies and procedures. We note that the guidelines require the development of policies that detail the different assets referenced and their correlation with the relevant segregated reserve of assets (Article 3(1)). The EBA notes in the consultation the liquidity management policy and procedures of the issuer need to be separate for each ART, consistent with the required legal and operational segregation of their corresponding reserve of assets. We would recommend that the EBA clarifies that this provision does not limit issuers use of custodians on a fair, reasonable and non-discriminatory basis as required in MiCAR.1
1 Article 45(2), MiCAR
Question 4. Do respondents have any comment regarding the minimum content envisaged in Article 4 of these RTS about the liquidity stress testing under Article 45(4) of MiCAR to be included in the liquidity management policy?
We do not have specific proposals on the minimum content of liquidity stress testing in the liquidity management policy, process and procedures. We would recall that issuers are likely to place significant reliance on intermediaries such as CASPs – including the data that will be required to be reported to them under MiCAR – for historical and current data analysis such as the profile of ART and EMT holders.
Question 5. Do respondents find any provision unclear to apply?
NA
Question 6. Do respondents have any comment on the impact assessment provided?
We do not have any specific comments on the impact assessment. We are supportive of the EBA decision to adopt its ‘option 1’ approach which appears to cover the basis risk test from a qualitative point of view without additional requirements beyond those already applied to issuers in MiCAR.