European split on NSFR worries dealers

Squabble over derivatives liabilities factor sparks fears of unlevel playing field

Opposite directions
Stalemate: the European Council states the NSFR should be set at 5%; however, the European Parliament prefers 15%

Conflicting proposals on the calibration of the net stable funding ratio unveiled by European Union policymakers have raised concerns that European banks will be forced to raise a far greater amount of high-quality funding for derivatives positions than foreign dealers.

Last week, the European council presidency issued a progress report on the revised Capital Requirements Regulation (CRR II), which will graft Basel III banking reforms – including the NSFR – into European law. It states that the

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