Article 417

Path:
Capital Requirements Regulation (CRR) > PART SIX > TITLE II > Article 417
Title:
Article 417
Description: 
Operational requirements for holdings of liquid assets
Main content: 

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

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

(d) 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:

(i) to test the access to the market for these assets;

(ii) to test the effectiveness of its processes for the liquidation of assets;

(iii) to test the usability of the assets;

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

(e) 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:

(i) hedging or other trading strategies;

(ii) providing credit enhancements in structured transactions;

(iii) covering operational costs.

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

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