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ARTICLE · 11 MARCH 2019

OSFI Proposes Changes To The Liquidity Adequacy Requirements

The Office of the Superintendent of Financial Institutions (OSFI) has issued proposed revisions (the Revisions) to certain chapters of the Liquidity Adequacy Requirements (LAR) guidelines.

CanadaFinance and Banking

The Office of the Superintendent of Financial Institutions (OSFI) has issued proposed revisions (the Revisions) to certain chapters of the Liquidity Adequacy Requirements (LAR) guidelines. The LAR set out the framework that Canadian deposit-taking institutions (DTIs) must follow to mitigate the risk of a stressed environment leading to insufficient liquidity. The Revisions are a response by OSFI to what it perceives to be changing business practices of DTIs, notably that "institutions are increasingly funding their business with deposits that tend to exhibit higher risk of withdrawals in periods of stress."

The Revisions include changes to the calculation for the Liquidity Coverage Ratio, as set in Chapter 2, as well as adjustments to how Net Cumulative Cash Flow is calculated in Chapter 4. The Revisions also include the introduction in Chapter 5 of the Liquidity Activity Monitor, a tool which provides OSFI with frequent and timely account balances for liquidity

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