In October 2014, the Basel Committee on Banking Supervision published revisions to its Net Stable Funding Ratio (NSFR) with an international implementation date of January 1, 2018.
The Committee’s proposed NSFR standard requires banks to maintain a stable funding profile relative to the composition of their assets and off-balance sheet activities. Once in force, the NSFR rules will play an important role in determining the liquidity adequacy of financial institutions.
Given the international activities of many Canadian institutions, the implementation of the NSFR guidance in Canada is impacted by the timing of implementation in foreign jurisdictions. At this time, it is uncertain that key foreign markets will implement the revised standard by the January 2018 deadline. Therefore, this letter provides notification to Canadian deposit-taking institutions that OSFI intends to extend the domestic implementation timeline of the NSFR to January 2019.
OSFI remains committed to implementing the NSFR standards in its Liquidity Adequacy Requirements (LAR) Guideline. In the coming months, OSFI plans to meet with industry stakeholders to review its guideline implementation plans and to clarify the remaining details of the NSFR rules as they relate to the Canadian market.
Relevant areas of the LAR Guideline have been updated to reflect the domestic NSFR implementation delay. Until OSFI begins its public consultation process on the NSFR rules and issues a draft guideline for comment, the LAR Guideline will continue to contain placeholder text reflecting OSFI’s commitment to implement the NSFR standard in Canada.
If you have any questions or comments on the above please contact Brian Rumas, Director, Capital Division at email@example.com.
Assistant Superintendent, Regulation Sector