FSA Eases Liquidity Rules Until Q4

The Financial Services Authority announced today that it will not enforce the new liquidity rules it introduced in October 2009 due to the lack of economic recovery. It plans to reconsider its position later this year and make its next announcement in on the rules in the fourth quarter of this year.

Meanwhile, the agency said it will continue to work with firms that would be most affected by the new rules, to help them take the needed steps to mitigate liquidity risk.

The FSA's new rules include an updated, narrow definition of liquid assets; requirements for self-sufficiency and having adequate liquid resources; enhanced systems and controls requirements; granular and more frequent reporting requirements; and new rules for foreign branches that operate in the UK.