EBA publishes final draft Technical Standards on metrics for monitoring additional liquidity

The European Banking Authority (EBA) publishes today its final draft Implementing Technical Standards (ITS) on additional liquidity monitoring metrics. The ITS provide supervisors with an adequate toolkit to assess the liquidity risk profile of institutions. The standards will be part of the Single Rulebook aimed at enhancing regulatory harmonisation in the banking sector in the European Union (EU).

The EBA developed these ITS following the approach of the Basel Committee on Banking Supervision (BCBS). The monitoring tools in these ITS, together with the Liquidity Coverage Ratio (LCR) standard, will support EU supervisors in the assessment of the liquidity risk of an institution. They aim at allowing the identification of potential liquidity difficulties that may emerge from a negative trend or an absolute result in the metrics.

In particular, the ITS issued by the EBA set out five metrics:

• Contractual maturity ladder;
• Concentration of counterbalancing capacity by issuer/counterparty;
• Concentration of funding by counterparty and product type;
• Prices for various lengths of funding;
• Roll-over of funding.

The proposed application date is 1 July 2015.

Legal basis and next steps

These final draft ITS have been developed pursuant to Article 415(3)(b) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (colloquially known as Capital Requirements Regulation or CRR).

The final standards have been sent today to the European Commission for their adoption as EU Regulations that will be directly applicable throughout the EU.