5 Liquidity Maintenance Ratio (LMR) Calculation

The LMR is a simplified form of the LCR for institutions designated as Category 2 by the Hong Kong Monetary Authority. It is a ratio of the amount of a category 2 institution’s liquefiable assets to the amount of the institution’s qualifying liabilities over a calendar month.

As prescribed by the HKMA, a Category 2 institution must maintain an LMR of not less than 25% on average in each calendar month.

Figure 4-1 Liquid Maintenance Ratio

Where:

Total Liquefiable Assets is the Sum of all Liquefiable Assets (Post Haircut) minus the Deductions from Liquefiable Assets (Post Haircut).

Total Qualifying Liabilities is the Sum of all Qualifying liabilities (Post Haircut) minus the Deductions from Qualifiable Liabilities (Post Haircut).