Featured Product

    US Agencies Finalize Rule on Net Stable Funding Ratio Requirements

    October 20, 2020

    US Agencies (FDIC, FED, and OCC) adopted a final rule that implements the net stable funding ratio (NSFR) for certain large banking organizations. The rule requires the banking organizations to maintain minimum amount of stable funding to support their assets, commitments, and derivatives exposures over a one-year time horizon. Under the final rule, the NSFR requirement increases in stringency based on risk-based measures of the top-tier covered company. The effective date for this final rule will be July 01, 2021. Holding companies and any covered nonbank companies regulated by FED will be required to publicly disclose their NSFR levels semiannually beginning in 2023.

    The US Agencies are adopting in final form the 2016 proposal to implement NSFR requirement, with certain adjustments. The agencies are also finalizing the two "tailoring proposals" released subsequent to issuance of the proposed rule to revise the criteria for determining the scope of application of the NSFR requirement. FED will issue a separate proposal for notice and comment to amend its information collection under its complex institution liquidity monitoring report (FR 2052a) to collect information and data related to the requirements of the final rule. The agencies received approximately 30 comments on the proposed rule and approximately 20 comments related to the NSFR rule in response to the tailoring proposals. The final rule retains the general design for the NSFR calculation and calibrates minimum requirements to the risk profiles of banking organizations in a manner consistent with the tailoring final rule. FED also published statements from the Governor Brainard and the Vice Chair for Supervision Randal K. Quarles, with comments on the published rule. However, as part of the modifications, the final rule:

    • Assigns a 0% required stable funding factor to unencumbered level 1 liquid asset securities and certain short-term secured lending transactions backed by level 1 liquid asset securities
    • Provides more favorable treatment for certain affiliate sweep deposits and non-deposit retail funding
    • Permits cash variation margin to be eligible to offset a covered company’s current exposures under its derivatives transactions even if it does not meet all of the criteria in the agencies’ supplementary leverage ratio rule; variation margin received in the form of "rehypothecatable" level 1 liquid asset securities to also be eligible to offset current exposures of a covered company
    • Reduces the amount of a covered company’s gross derivatives liabilities that will be assigned a 100% required stable funding factor
    • Amends certain definitions in the agencies’ liquidity coverage ratio rule that are also applicable to the NSFR

    The final rule applies to certain large U.S. depository institution holding companies, depository institutions, and U.S. intermediate holding companies of foreign banking organizations, each with total consolidated assets of USD 100 billion or more, together with certain depository institution subsidiaries. The rule establishes NSFR as a quantitative metric to measure the stability of the funding profile of certain large banking organizations. U.S. depository institution holding companies and U.S. intermediate holding companies subject to the final rule are required to publicly disclose their NSFR and certain components of their NSFR every second and fourth calendar quarter for each of the two immediately preceding calendar quarters. 

    Related Links

    Effective Date: July 01, 2021

    Keywords: Americas, US, Banking, Reporting, NSFR, LCR, Basel, Liquidity Risk, Disclosures, US Agencies

    Featured Experts
    Related Articles

    EBA Publishes Final Regulatory Standards on STS Securitizations

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.

    September 20, 2022 WebPage Regulatory News

    ECB Further Reviews Costs and Benefits Associated with IReF

    The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.

    September 15, 2022 WebPage Regulatory News

    EBA Publishes Funding Plans Report, Receives EMAS Certification

    The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).

    September 15, 2022 WebPage Regulatory News

    MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures

    The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.

    September 15, 2022 WebPage Regulatory News

    BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules

    The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.

    September 15, 2022 WebPage Regulatory News

    IOSCO Welcomes Work on Sustainability-Related Corporate Reporting

    The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)

    September 15, 2022 WebPage Regulatory News

    BoE Allows One-Day Delay in Statistical Data Submissions by Banks

    The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.

    September 14, 2022 WebPage Regulatory News

    ACPR Amends Reporting Module Timelines Under EBA Framework 3.2

    The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.

    September 14, 2022 WebPage Regulatory News

    ECB Paper Discusses Disclosure of Climate Risks by Credit Agencies

    The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)

    September 13, 2022 WebPage Regulatory News

    APRA to Modernize Prudential Architecture, Reduces Liquidity Facility

    The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.

    September 12, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8514