FINRA Repo Liquidity Filings
On Jan. 8, FINRA consulted on a supplemental liquidity schedule.
- Proposed amendment to FINRA Rule 4521, and a supplemental liquidity schedule.
- Event Notification
- Require firms to notify FINRA in 48 hours of event that may signify a liquidity risk.
- If firm becomes aware of lost access to secured funding via repo or stock loan, of
above 20% of highest amount borrowed by contract over 35 rolling calendar days.
- Any one of firm’s five largest repo or loan counterparties, raises collateral by 20%.
- Five largest counterparties initiates termination outstanding repo prior to maturity,
initiates the option not to renew, or reduces access to undrawn or unused finance.
- Aware of reduction or termination of lines of credit from banks, of 20% in 35 days.
- Firm triggers material adverse change clause, in a contract containing such clause.
- SLS Reporting Form
- New Supplemental Liquidity Schedule (SLS) filing by firms with their FOCUS Report.
- On SLS, firms report on repo financing trades and other sources or uses of liquidity.
- Information would includes financing term, collateral type and large counterparties.
- Require SLS reporting from firms with largest customer and counterparty exposure.
- Scope of Firms Covered
- Filing is by each carrying or clearing FINRA firm with $25mn or more in total credit.
- Credit per customer reserve formula computation, as set forth in SEA Rule 15c3-3.
- Filing also for firms whose aggregate outstanding under repo, securities loans, and
bank loans is equal to or greater than $1bn, as reported on the most recent FOCUS
- Follows FINRA Sep. 2015 guide on liquidity risk management practice, see #23022.
- FINRA estimated 110 firms required to file SLS; comment period until Mar. 8, 2018.
||B/D; Bank; Depo
||RN 18-02, PR, 1/8/2018; Rule 4521; SEA Rule 15c3-3; SEA Rule 17a-5
||Compliance; Financial; Legal; Operations; Reporting; Risk; Treasury
||United States of America
||Loan; Repo/Reverse; Securities; Stock Lending
Last substantive update on 01/08/2018