A primer on SFT minimum haircut rules in upcoming Basel III changes

In 2020, the Financial Stability Board (FSB) published their recommendations on minimum haircuts for Securities Finance Transactions. The scope was specific: “The framework of numerical haircut floors applies to non-centrally-cleared securities financing transactions in which financing against collateral other than government securities is provided to non-banks.” Some observers have wondered why the FSB put in so much effort, as the haircuts themselves reflect market conditions in most major jurisdictions already. Whatever the case, this is now the global standard that other regulators look to for direction.
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