Basel III Liquidity Framework: Basel Committee Publishes Final Net Stable Funding Ratio Disclosure Standards

Sullivan & Cromwell LLP - June 29, 2015

Last week, the Basel Committee on Banking Supervision (the “Basel Committee”) published final standards (the “Final Disclosure Standards”) for the disclosure of information relating to banks’ net stable funding ratio (the “NSFR”) calculations.  The Final Disclosure Standards were adopted substantially as proposed in December 2014. 

The NSFR, which the Basel Committee adopted in final form in October 2014, is one of the key standards, along with the liquidity coverage ratio (the “LCR”), introduced by the Basel Committee to strengthen liquidity risk management as part of the Basel III framework.  The NSFR is designed to promote more medium- and long-term funding of the assets and activities of banks over a one-year time horizon.  The Final Disclosure Standards, in turn, are part of the broader so-called Pillar 3 disclosure regime (along with disclosure requirements in capital rules as well as the LCR-related disclosure framework) and are designed to “improve the transparency of regulatory funding . . . , enhance market discipline, and reduce uncertainty in the markets as the NSFR is implemented.