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Version from: 01/01/2023
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Article 417 - Operational requirements for holdings of liquid assets

Article 417

Operational requirements for holdings of liquid assets

The institution shall only report as liquid assets those holdings of liquid assets that meet the following conditions:


they are appropriately diversified. Diversification is not required in terms of assets corresponding to points (a), (b) and (c) of Article 416(1);


they are legally and practically readily available at any time during the next 30 days to be liquidated via outright sale or via a simple repurchase agreement on approved repurchase markets in order to meet obligations coming due. Liquid assets referred to in point (c) of Article 416(1) which are held in third countries where there are transfer restrictions or which are denominated in non-convertible currencies shall be considered available only to the extent that they correspond to outflows in the third country or currency in question, unless the institution can demonstrate to the competent authorities that it has appropriately hedged the ensuing currency risk;


the liquid assets are controlled by a liquidity management function;


a portion of the liquid assets except those referred to in points (a), (c), (e) and (f) of Article 416(1) is periodically and at least annually liquidated via outright sale or via simple repurchase agreements on an approved repurchase market for the following purposes:


to test the access to the market for these assets;


to test the effectiveness of its processes for the liquidation of assets;


to test the usability of the assets;


to minimise the risk of negative signalling during a period of stress;


price risks associated with the assets may be hedged but the liquid assets are subject to appropriate internal arrangements that ensure that they are readily available to the treasury when needed and especially that they are not used in other ongoing operations, including:


hedging or other trading strategies;


providing credit enhancements in structured transactions;


covering operational costs.


the denomination of the liquid assets is consistent with the distribution by currency of liquidity outflows after the deduction of inflows.