Tightened liquidity regulations in store for all securities firms

The country's financial regulator said Monday that it will seek to revise liquidity level-related regulations to prod securities firms to enhance their risk management capability. Under the proposed revision, all securities firms should keep their one-month and three-month liquidity ratio at above 100 percent each. The revision is expected to take effect starting next year after law and enforcement revisions, according to the Financial Services Commission (FSC). Currently, only 23 securities firms, including 10 brokerage houses designated as those who are allowed to run a wide range of business, such as corporate lending, are subject to such rules. The liquidity ratio is measured by dividing liquid assets by liquid debts. The FSC said their liquidity ratio measurement will price in discounts of volatility risks on liquidity assets, and contingent liabilities and debt guarantees will be added to their debt liquidity level, which it said would more clearly show their financial soundness, and better respond to various risks.