Softer US NSFR could skew global repo pricing

US banks benefit from Treasury repo exemption, while EU banks report only end-quarter ratios

The US and the European Union are on track this year to implement the last piece of the Basel III liquidity framework, the Net Stable Funding Ratio (NSFR).

In the seven years that have passed since the standard was approved by the Basel Committee for Banking Supervision (BCBS), concerns about its implications for repo liquidity have escalated, and the final rules in both jurisdictions make fewer demands of big banks than previous versions.

The NSFR requires banks to hold a minimum amount of