BANK 9.2.8 Contingency funding plan

(1) A banking business firm must have a formal contingency funding plan that clearly sets out the firm's strategies for addressing liquidity shortfalls in emergency situations. The plan:
(a) must outline policies to manage a range of liquidity stress situations;
(b) must establish clear lines of responsibility; and
(c) must include clear escalation procedures.
(2) The plan must be appropriate for the nature, scale and complexity of the firm's operations and the firm's role in the financial systems in which it operates.
(3) The plan must provide a framework with a high degree of flexibility so that the firm can respond quickly in a variety of liquidity stress situations.
(4) The plan must set out:
(a) available sources of contingency funding and an estimate of the amount of funds that can be obtained from each source;
(b) clear procedures for escalation and prioritisation, setting out when and how each of the actions in the plan can and must be activated; and
(c) the lead time needed to obtain additional funds from each of the sources.
(5) The plan's design, scope and procedures must be closely integrated with the firm's continuing analysis of liquidity risk and with the assumptions used in its stress tests and the results of those tests. The plan must address issues over a range of different time horizons, including intraday.
(6) The firm must review and test the plan regularly to ensure that the plan remains effective and operationally feasible. The firm must review and update the plan for the governing body's approval at least annually (or more often, as changing business or market circumstances require).
Inserted by QFCRA RM/2018-1 (as from 1st May 2018).