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Article 4 - Consideration of the liquidity risk profile of the liquidity receiver in the liquidity risk management of the liquidity provider

Article 4

Consideration of the liquidity risk profile of the liquidity receiver in the liquidity risk management of the liquidity provider

The liquidity risk profile of the liquidity receiver is taken into account in the liquidity risk management of the liquidity provider as referred to in point (c) of Article 29(2) and in point (c) of Article 34(2) of Delegated Regulation (EU) 2015/61 where the following conditions are satisfied:

(a)

the liquidity provider monitors and oversees the liquidity position of the receiver on a daily basis. In case of correspondent banking, the monitoring and the oversight of the liquidity position of the receiver may be limited to the balances of the vostro accounts of the liquidity receiver;

(b)

the effects of the preferential outflow or inflow rate are fully considered and integrated into the contingency funding plans of the liquidity provider and the liquidity receiver, which take into account potential impediments to the transfer of such liquidity and assess the time needed to implement such a transfer. For these purposes, the liquidity provider demonstrates to the relevant competent authorities that it can reasonably be expected to continue to provide the liquidity facility to the liquidity receiver even in times of stress, without having a material adverse impact on its own liquidity position. The contingency funding plan of the liquidity provider ensures that it does not rely on the liquidity needed to honour the committed credit or liquidity line of the liquidity receiver;

(c)

the contingency funding plan of the liquidity provider takes into account the preferential outflow or inflow rate in order to ensure its ability to provide the necessary liquidity when required.