Repo desks up in arms about NSFR

Draft rules would add an estimated 60 basis points to the cost of some overnight repo

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Basel Committee on Banking Supervision headquarters

Bank lobbyists are mobilising to combat a new threat to the repo market, which they claim could drive up the cost of some transactions by more than 850% – from seven basis points today, to 67bp if Basel III's net stable funding ratio (NSFR) is implemented as outlined in January. That could filter back into financing costs, with investors demanding more yield to make up for the cost of borrowing securities, and would dramatically cut the liquidity available in reverse repo markets, bankers warn.

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