Regulatory Notice 15-33

Guidance on Liquidity Risk Management Practices

Executive Summary

Effective liquidity management is a critical control function at brokerdealers and across firms in the financial sector. Failure to manage liquidity has contributed to both individual firm failures and, when widespread, systemic crises. From an investor protection perspective, sound liquidity risk management practices enhance investor protection because they make it more likely that a firm’s customers continue to have prompt access to their assets, even in times of stress.

FINRA is providing guidance on effective practices that senior management and risk managers at firms should consider and implement. This Notice is directed to firms that hold inventory positions or clear and carry customer transactions. Other types of broker-dealers may also find this Notice is of value to them when assessing their own liquidity risks.

Questions concerning this Notice should be directed to:

  • Mark Frankenberg, Director, Risk Oversight and Operational Regulation, (646) 315-8816;
  • Robert Mendelson, Senior Advisor, Risk Oversight and Operational Regulation, (646) 315-8660; or
  • Anthony Sacco, Examination Director, Risk Oversight and Operational Regulation, (646) 315-8441.