Liquidity Subcommittee
The liquidity subcommittee takes responsibility for considering the impact of changes to the regulatory liquidity regime under which LMMA members operate. The regulator in question is the Financial Services Authority, but there is also close contact with the Bank of England who publish lists of eligible assets within certain liquid asset classes.
The FSA is proposing major changes to the existing liquidity regime, and have published a Discussion Paper (DP24) which sets out their thoughts on a new Quantitative Framework. This has caused considerable concern within the industry, and as a result of lobbying from banks and trade bodies the timetable for implementation has been delayed.
A number of working parties will consider aspects of the Quantitative Framework, and the FSA are intending to release a Consultation Paper in the first quarter of 2005. Following further industry discussion it is expected that the revised Quantitative Framework will be implemented in 2007 or 2008.
LMMA members are providing input on this subject direct to the FSA, through the working parties, and through trade bodies. The LMMA intends to focus on the anticipated impact on the underlying financial markets of the final Quantities Framework, and will respond to the FSA during the consultation period.
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