BSP Deputy Governor Francisco Dakila said the bulk of the liquidity
in the financial system goes to production activities.
"CBK was in the market Wednesday to mop up Sh12 billion worth of liquidity
through its open-market operations.The CBK mainly relies on the repo instrument when mopping up liquidity
, but due to their short-term nature the funds quickly find their way back into the market compelling the CBK to go back frequently to maintain the level of liquidity
it considers optimal.
The BSP said the Monetary Board also approved enhancements to the LCR and Minimum Liquidity
Ratio (MLR) guidelines in response to feedback received as a result of the BSP's continuing dialogue with the banking industry.
"This is the fifth liquidity
providing agreement signed by Al Ramz Capital and the first on the Nasdaq Dubai.
Following the occurrence of an event of default under the liquidity
facility, JPM may direct the IPA to immediately stop the issuance of any additional notes.
In a region where investors have historically struggled with liquidity
, the Liquidity
Provision product offers companies the means to guarantee a tight bid/ask spread and increase the daily turnover of shares which in turn renders investment less risky and reduces cost of capital.
DFM registered Sico in line with guidelines issued by the UAE's main financial regulatory body, the Securities and Commodities Authority (SCA), which stipulates that the ownership of a liquidity
provider cannot exceed five per cent of the listed company's shares and that issuers have the right to assign multiple liquidity
Financial covenants in loan documentation weakened in 2017, which is negative from a lender's perspective insofar as it reduces creditor protection, but can also reduce, or delay, potential liquidity
pressure emanating from a covenant breach.
The NSFR is adopted to complement the liquidity
coverage ratio which covers a shorter period of over 30 days in which a bank will hold sufficient high quality liquid assets that can be easily converted into cash to service their liquidity
requirements, said the BSP.
The aim of the LCR is to strengthen regulations and promote a more resilient banking sector, ensure a bank has high-liquidity assets that can meet its needs for a 30-day stress scenario, meet the Net Stable Funding Ratio (a metric for liquidity
) and improve the banking sector's ability to absorb shocks, "thus reducing the risk of spillover from the financial sector to the real economy," according to the website of the Basel-based financial institution for the world's central banks, the Bank for International Settlements.
"Being a premier provider of Liquidity
Provision services in the region with active mandates to companies listed on the DFM and the ADX, has definitely brought increased liquidity
to these companies and we look forward to sign up more corporates over the coming months." Mohammed Al-Murtada Al Dandashi, Managing Director of Al Ramz Corporation said.
The UAE Central Bank withdrew AED3.1 billion in excess liquidity
during August, bringing the total withdrawals to AED11.3 billion in two months, UAE state news agency WAM reported.