FSA Liquidity Reporting to cost up to £2 billion

Just received an interesting note from PJ Di Giammarino, Chair of our Capital Markets Chamber (who meet this Thursday**) and building on his comments from last week.

He's been looking through the lines of the FSA's latest "Strengthening Liquidity Standards 2", which we debated last month, and finds that Chapter Seven suggests that the 661 firms who are significantly affected by these requirements will need to devote
resources to change their systems and hire more staff to cope with the new
requirements.

This is so that they can the banks report daily information, based upon strong liquidity data analysis.

Based upon these requriements, the costs are estimated to be from £49,000 each for the 58 building societies through to £3.3 million for the 157 UK
banks, and as much as £7.4 million for the 244 full-scope investment firms.  In addition, the 202 UK branches of foreign banks
are looking at costs of £542,000 each.

All in all, on an ongoing basis, banks will need to spend
between £517,000 and £775 million depending on how much crisis reporting is
required.

That's around £2 billion in totality, and a lot more than the FSA forecast back in
December 2008, when CP 08/22 was released estimating costs for
the liquidity risk regime to be £150 - £200 million.

Comments on the CP are due by
15 July 2009 and the revised reporting must be implemented by March
2010.

** This Thursday, the Capital Markets Chamber are debating: "This House believes banks can't count high enough to measure their UK carbon reduction commitment ... but their regulators can!"

The Speakers will be:  
Reg Warlop  MD of
CO2Benchmark.com
Rajesh Shah until recently, the Global Head of Non-IT
Sourcing and Supply Chain across Barclays Capital and Barclays Wealth. 

Peter Windebank, Consultant working with JWG-IT        

Click here if you would like to attend.

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