Liquidity Stress Testing (LST)

Enables FIs to efficiently implement LST frameworks to meet Basel mandates and comprehensive liquidity assessment requirements in multiple jurisdictions

Overview

Comprehensive LST Framework

Creating and implementing liquidity stress testing (LST) frameworks is demanding for all financial institutions (FIs) because they need liquidity risk data both for Basel Pillar II stress tests as well as for comprehensive liquidity assessment requirements in multiple jurisdictions.

Requirements

Additional pressure is coming from the:

Need to manage huge volumes of daily data for Reg YY LST Liquidity Buffer compliance monitoring and daily and monthly liquidity stress testing reporting
Changing volumes of financial products and conditions of funding markets

Burden to report correctly and more frequently while relying on many unsustainable manual processes and in the face of shrinking resources.
Need for adequate controls and transparency of data from source to results

The above factors are forcing FIs to reevaluate their approach to meeting liquidity-reporting challenges.

Questions to Consider

Do we have access to the data we need for prompt and accurate liquidity stress-testing requirements from Basel III’s Pillar II, as well as from different national regimes?
Do we have a single core liquidity engine to create, execute, store, view, and report the complete and transparent LST rules for classification and computation?
Can we apply different haircuts to highly liquid assets (HLA) when market conditions deteriorate?
Do we have adequate internal LST measurement monitoring and reporting capabilities?

Do we have confidence that our data is complete and accurate so that liquidity stress-testing are trusted measures when senior executives, board directors, and regulators see them?
Can we apply different run-offs or roll-overs to all cash and collateral in- and out-flows as LST scenarios change?
Can we apply different haircuts to high-quality liquid assets (HQLA) if LCR regulatory requirements change?
Do we have adequate data and process controls and transparency of data from source to process to results?

Solution

Liquidity Ecosystem

AxiomSL’s liquidity ecosystem empowers FIs to use their trusted liquidity data to deliver liquidity risk ratios and other regulatory reporting and to derive compelling analytic benefits.

Powerful Modules

The solution incorporates the powerful modules:

The LCR-logic module delivers net cash-flows along with LCR rule categories that give the FI’s regulatory-required LCR value
The solution runs on ControllerView®, AxiomSL’s data integrity and control platform