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ARTICLE · 26 MAY 2016

EU Regulation On Conditions For Derogation From The Liquidity Coverage Requirement

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On May 13, 2016, a Commission Delegated Regulation containing Regulatory Technical Standards specifying the conditions for the application of derogations...

European UnionFinance and Banking
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On May 13, 2016, a Commission Delegated Regulation containing Regulatory Technical Standards specifying the conditions for the application of derogations, concerning currencies with constraints on the availability of liquid assets, under the Capital Requirements Regulation was published in the Official Journal of the European Union. The CRR sets out a Liquidity Coverage Requirement which requires firms to hold liquid assets to maintain adequate levels of liquidity buffers to cope with any possible imbalances between liquidity inflows and outflows. Firms may derogate from the LCR where the requirement exceeds the availability of those assets in a particular currency.

The RTS sets out the conditions for a firm to apply the CRR's provisions on derogation of currency constrains and the availability of liquid assets. A firm must notify its regulator of its intention to apply one or both of the derogations in writing 30 days before the application of the first derogation

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