FINRA is soliciting comment on a concept proposal to establish liquidity risk management program (LRMP). The concept proposal describes a potential rule that is intended to ensure that members have sufficient liquid assets to meet their funding needs in both normal and stressed conditions.
Broadly, the proposal outlines three areas where a potential rule might address liquidity risk, including liquidity stress testing, contingent funding plans and a requirement to maintain sufficient liquidity on a current basis at all times. The rule would be expected to apply to members with the largest customer and counterparty exposures.
The LRMP would require the subject member to conduct liquidity stress testing and establish and maintain a contingency funding plan. Furthermore, the potential rule would require each subject member to have available cash or liquid assets sufficient to meet its funding obligations as they come due and would enable FINRA to direct a member to take such measures as shall be necessary, including restricting or suspending its business, if it does not maintain sufficient liquidity.