AI Summary of Article 417 Operational requirements for holdings of liquid assets
The institution must report liquid assets that adhere to specific criteria, emphasising appropriate diversification, readiness for liquidation, and control by a dedicated liquidity management function. Such assets should be accessible within 30 days, ensuring they can be sold or used in repurchase agreements to meet impending obligations.
Furthermore, these assets must undergo periodic liquidation tests to validate market access, effectiveness, and usability whilst mitigating negative signalling risks during stress periods. It is crucial that price risks can be hedged without compromising the liquidity demands of the treasury, thereby ensuring alignment with the institution's overall liquidity strategy.
Article 417 Operational requirements for holdings of liquid assets
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);
(b) they are legally and practically readily available at any time during the next 30 days to be liquidated via outright sale or via a simple repurchase agreement on approved repurchase markets in order to meet obligations coming due. Liquid assets referred to in point (c) of Article 416(1) which are held in third countries where there are transfer restrictions or which are denominated in non-convertible currencies shall be considered available only to the extent that they correspond to outflows in the third country or currency in question, unless the institution can demonstrate to the competent authorities that it has appropriately hedged the ensuing currency risk;
(c) the liquid assets are controlled by a liquidity management function;
(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: