The Dubai Financial Services Authority (DFSA) has released a comprehensive report on the Assessment of the Implementation of the Liquidity Coverage Ratio (LCR), shedding light on the liquidity profiles of firms within the Dubai International Financial Centre (DIFC).
The report underscores the necessity for enhanced liquidity management and shares best practices observed during the review.
Liquidity risk is paramount for institutions engaged in financial intermediation, such as those accepting deposits. As the DIFC’s financial regulator, the DFSA is dedicated to ensuring that these institutions maintain robust defenses against liquidity risks. This commitment involves imposing specific quantitative measures on certain firms. These measures are part of a broader framework that mandates robust internal systems, controls, and governance arrangements. The DFSA's risk-based supervisory approach further bolsters the overall soundness of the DIFC.
In recent months, the DFSA conducted a thorough thematic review of the liquidity risk management of firms subject to the LCR. This review aimed to assess the adequacy of the firms' implementation of the requirements outlined in the PIB Module of the DFSA Rulebook. The goal was to evaluate the effectiveness of current practices and identify areas needing improvement.
Justin Baldacchino, Managing Director of Supervision at the DFSA, emphasized the importance of sound liquidity management.
"The DFSA places utmost importance on the sound management of liquidity for firms operating in the DIFC. Liquidity risk can escalate rapidly, and complacency is not an option. We are committed to maintaining the highest standards of financial regulation and oversight within the DIFC, fostering a secure and resilient financial environment,"
he stated.
The DFSA urges firms subject to the LCR requirement to review the report, consider its findings, and implement necessary actions to address identified deficiencies. This proactive stance is crucial to ensure that robust liquidity management practices are in place, thereby maintaining financial stability within the DIFC.
News Source: Emirates News Agency
