Funding flap: dealers slam NSFR impact on derivatives
The treatment of derivatives in the net stable funding ratio is under fire from industry experts, who claim it could raise end-user hedging costs by up to 15%
Funding derivatives is about to become more expensive – as much as $500 billion more, according to some estimates.
The culprit is the net stable funding ratio (NSFR), the second of the Basel Committee on Banking Supervision's two liquidity requirements. The NSFR is supposed to push banks to shun risky, short-term borrowing in favour of steadier, longer-term financing of assets.
However, its
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