The increasing scrutiny being placed on firms as the FSA and other global regulators rollout their new liquidity management regimes will leave some struggling to source data and provide the evidence that they have sufficient resources available to meet their obligations as they fall due.
The stress testing required under various scenarios is prescriptive with a focus on well thought out and documented assumptions, and the ability to analyse each of the ten FSA defined sources of risk from wholesale funding to asset diversification risk. Additionally, firms have to record details of actions taken to reduce gross exposures record evidence supporting behavioural assumptions made and show evidence which supports the assessment of the adequacy of liquid assets buffers. A systems based solution is a pre-requisite.
While the new Axiom module runs alongside the existing liquidity reporting solution driven by the new FSA Liquidity Regulatory Returns (eg. FSA047/48 etc), it also works alongside other in-house and vendor FSA liquidity reporting solutions. When a firm stands out from a peer group/DLG, further analysis and spot checks triggered by the FSA MI module will increase the pressure to provide accurate auditable data to support the firmâs position with a transparent business logic stream.
The solution supports a range of stress testing approaches from stressing line items to performing spreadsheet calculations as per FSA guidance such as calculations of shortfalls, stress periods etc, to using a parameter table to define variables that will input into the test (showing stressed data alongside actuals). Firms can gain complete transparency across business data and logic, and tailor and create various standard or adhoc reports based on the FSA MI module. The module can be extended and tailored according to client specific needs.âWe are pleased to offer a comprehensive solution to the FSA liquidity stress testing requirements that will allow our current users and new firms running regulatory reports on other platforms to take advantage of the unrivalled flexibility of the Axiom architectureâ says Edward Royan, AxiomSL UK Delivery & Operations Manager.
âAxiomâs integrated platform helps firms to identify, measure, manage and monitor the liquidity risks to which they may be exposedâ added Royan. This feature will greatly contribute in increasing confidence amongst both regulators and management.