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BNM/RH/GL 001-07

Prudential Financial Policy Department

Liquidity Framework

Page 8/28

the provider of the facility must be banking institutions that are normally capable of providing large volume of funds at short notice. To avoid over-reliance on Class-2 liquefiable assets and from formally available credit lines as the primary source of reserve liquidity, the total amount allowable to be recognised should not comprise more than 50% of the Class-1 liquefiable assets1. Investment banks are allowed to classify KLSE Main Board equities held in their proprietary book (that are subject to daily mark-to-market) as liquefiable assets subject to a forced sale discount or at the fair value of the equity, whichever is lower.2 6.10. The stock of liquefiable assets that may be drawn upon when coping with unexpected heavy withdrawals are listed in Part 4 of Appendix 1, along with the respective forced sale discount factors to be applied. · 6.8. 6.9.

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With effect from 3 September 2004. Previously, the limit was 30%. With effect from 1 July 2005.

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