Regulatory Alerts2025-12-19
Added · Updated
Regulatory Framework for Supervision of Liquidity Risk
The Monetary Authority issues this statutory guideline to all authorized institutions (AIs) to define the supervisory framework for liquidity risk under the Banking Ordinance. It mandates that category 1 institutions maintain a Liquidity Coverage Ratio (LCR) of at least 100% and a Net Stable Funding Ratio (NSFR) of at least 100%, while category 2 institutions must maintain a Liquidity Maintenance Ratio (LMR) of not less than 25% on average each calendar month. Category 2A institutions are required to maintain a Core Funding Ratio (CFR) of at least 75% on average from 1 January 2019 onwards. The document also establishes rules for calculating these ratios on Hong Kong office, unconsolidated, and consolidated bases, and outlines notification obligations for liquidity events.
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