Banking regulations will not be tightened yet, FSA announces

9 March 2010

The UK’s Financial Services Authority (FSA) will not be tightening “quantitative standards” until the economy becomes more stable.

According to the industry regulator, the recovery of the markets needs to be guaranteed before any further pressure is put on firms.

The changes were originally announced in October 2009 to enhance liquidity risk management processes and prevent a future financial crisis from taking place.

In a statement, the body said: “The FSA believes that it would be premature to increase liquidity requirements across the industry at the current time. This position will be reviewed later on in the year with a further announcement in Q4, 2010.

“Meanwhile, the FSA is continuing to work with firms that are most affected by the new regime focusing on the steps they are taking to mitigate liquidity risk and on the additional impact of our progressively tightening quantitative requirements.”

The FSA’s new proposals included creating a new regime for foreign firms operating in the UK, more regular reporting requirements and implementing a narrower definition of liquid assets.

By Jim Ottewill

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