What are the key systems challenges posed by Liquidity Coverage Ratios?

The financial crisis and near collapse of the global banking system in 2008 has resulted in the much tighter regulation of the banking sector in the US and around the world.  US authorities have implemented a package of Enhanced Prudential Standards contained in a variety of new laws and updated regulations with the purpose to strengthen the solvency and liquidity resilience of the financial system, i.e.:

  • Risk-based capital and leverage requirements
  • Liquidity requirements
  • Stress tests
  • Single counterparty credit limits
  • Early remediation requirements

We talk with Bevin Crodian to consider specifically the changes that are necessary to meet the regulatory requirements of Liquidity Coverage Ratios (LCRs) and the impact of Dodd Frank. It is fair to say that these changes exceed the requirements contained in the international framework set out in Basel III. There are very detailed reporting and HQLA requirements that now have to be met at various thresholds by both banks and non-banks. In our conversation we examine the impact these changes are having on the operations and systems of different size banks