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  • Executive Summary

    • LM-A.1.1

      This Module provides detailed Rules and Guidance on risk management systems and controls required for minimum liquidity requirements for financing company licensees.

      January 2014

    • LM-A.1.2

      This Module expands on certain high-level requirements contained in various High-Level Standards Modules. In particular, Condition 5 of the Licensing Conditions (see Section AU-2.5) notes that financing company licensees must maintain sufficient liquid assets to meet their obligations as they fall due in the normal course of business. In addition, Principle 9 of the Principles of Business (see Paragraph PB-1.1.9) refers to the requirement to maintain adequate resources for financing company licensees to run their business in an orderly manner. Principle 10 of the Principles of Business (see Paragraph PB-1.1.10) also notes the requirement for licensees to maintain systems and controls to manage the level of risk inherent in their business and ensure compliance with the CBB Rulebook.

      January 2014

    • LM-A.1.3

      This Module sets out the minimum stock liquidity ratio and maturity mismatch ratios which financing company licensees must meet as a condition of their licensing. In addition, it outlines the need for proper systems and controls to ensure the prudent management of liquidity and the liquidity reporting and other requirements.

      January 2014

    • LM-A.1.4

      Liquidity risk is the risk of not being able to meet liabilities when they fall due, even though a firm may still be solvent. Liquidity risk in financing company licensees relates to the management of their cash flow and the risk to their meeting short-term liabilities due to liquidity problems. The purpose of these requirements is to ensure that financing company licensees hold sufficient liquid assets to meet their obligations as they fall due.

      January 2014