The Board of Governors of the Federal Reserve System ("FRB") adopted a final rule to implement public disclosure requirements for the liquidity coverage ratio ("LCR") rule. The final rule applies to all depository institution holding companies and covered non-bank financial companies that are required to calculate an LCR under the FRB's LCR rule ("covered companies"). The final rule: (i) requires covered companies to disclose publicly, on a quarterly basis, quantitative information about their LCR calculations, as well as factors that have a significant effect on their LCRs, and (ii) provides additional time for companies that become subject to future modifications of the LCR requirement in order to allow the companies to come into compliance with later versions of the requirement.

In response to comments it received on the initial proposal of the rule, the FRB adopted certain final rule changes that:

  • clarify that a covered company is not required to include any information that is proprietary or confidential in its qualitative disclosures, but is required to provide reasons why the specific information has not been disclosed;

  • with regard to qualitative disclosures, define "materiality" as information "the omission or misstatement of [which] could change or influence the assessment or decision of a user relying" on such omitted or misstated information;

  • allow covered companies to assess their qualitative disclosures based on the above materiality definition and standard;

  • require that a covered company discuss changes to its LCR and the causes of those changes; and

  • eliminate the requirement that a covered company provide a brief discussion of "significant changes" that (i) have occurred since the end of a quarter and (ii) would cause its quarter-end quantitative disclosures to cease to reflect its liquidity profile accurately.

Firms with total consolidated assets of $700 billion or more, or $10 trillion in assets under custody, have until April 1, 2017 to comply with the final rule. Other covered companies must comply by April 1, 2018. Covered companies that become subject to the rule in the future will have three months in which to comply with the rule after becoming subject to it.

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