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AMI 7.2.3

(1) A Clearing House must:
(a) determine the amount of its minimum liquid resources;
(b) maintain sufficient liquid resources to be able to effect same-day, intra-day or multi-day settlement, as applicable, of its payment obligations with a high degree of confidence under a wide range of potential stress scenarios;
(c) ensure that all resources held for the purposes of meeting its minimum liquid resource requirement are available when needed;
(d) have a well-documented rationale to support the amount and form of total liquid resources it maintains for the purposes of (b) and (c); and
(e) have appropriate arrangements in order to be able to maintain, on an on-going basis, such amount and form of its total liquid resources.
(2) A Clearing House must have a robust framework for managing its liquidity risks. Such a framework must enable it to manage liquidity risks arising from its Members and other participants on its facilities, and any other involved parties, such as settlement banks, custodian banks, liquidity providers ("Members and other involved parties"). For that purpose, the framework must, at a minimum, include:
(a) rules and procedures that:
(i) enable it to meet its payment obligations on time following any individual or combined default of its Members and other involved parties; and
(ii) address unforeseen and potentially uncovered liquidity shortfalls to avoid unwinding, revoking, or delaying the settlement of its payment obligations arising under the same-day, intraday or multiday settlement obligations, as applicable;
(b) effective operational and analytical tools to identify, measure and monitor its settlement and funding flows on an on-going and timely basis; and
(c) rigorous due diligence procedures relating to its liquidity providers to obtain a high degree of confidence that each provider (whether the provider is a Member or other participant using its facilities or an external party) has:
(i) sufficient information to assess, understand and manage its own liquidity risks; and
(ii) the capacity to perform as required under their commitment.
(3) A Clearing House must regularly:
(a) review the adequacy of the amount of its minimum liquid resources as determined in accordance with (1);
(b) test the sufficiency of its liquid resources maintained to meet the relevant amount through rigorous stress testing; and
(c) test its procedures for accessing its liquid resources at a liquidity provider.
Derived from RM118/2013 [VER15/07-13]