Liquidity regulations: beginning of observation period for the NSFR

The structural liquidity ratio (Net Stable Funding Ratio, NSFR) is part of the new liquidity regulations under Basel III. It should apply in Switzerland as a minimum requirement starting in 2018. The Swiss Financial Market Supervisory Authority FINMA is preparing its introduction. For test purposes, FINMA thus requires supervised institutions to submit a report as of 2015. 

The Basel Committee on Banking Supervision adopted the NSFR on 31 October 2014. The NSFR will complement the ratio for short-term liquidity (liquidity coverage ratio, LCR) in line with the international and Swiss time frame for the introduction of the Basel III regulations as a regulatory minimum standard as of 2018.

Similar to that of the LCR, the introduction of the NSFR should be proceeded by an observation period over an extended period of time. This procedure already proved successful when implementing the LCR. The data collected are used for a number of purposes. First, banks can start preparing for the new regulations. This allows them time in particular to adjust their banking and funding control system to the new indicator and to expand their reporting. Second, the data collected will flow into the discussion led by the national work group on liquidity regulation to draw up the NSFR regulations. Here they will also provide the basis for the discussion on calibration issues and creating the new NSFR documentary proof of liquidity. Finally, the data collected will allow the authorities to evaluate the effects of the introduction of the NSFR minimum requirements.

The observation period is for three years and is divided into two stages. Prior to the introduction of NSFR, FINMA will collect the following data:

  • Test reporting: Five test quarterly reports based on the Excel data collection forms as of 31 December 2014 for all banks in supervisory categories 1 to 3 and selected institutions in category 4.
  • General reporting: quarterly reporting based on the SNB reporting forms for all banks as of Q2 2016 to the end of 2017.

For test purposes, FINMA is providing a data collection form (in German)with instructions (in German) for reporting for the supervised institutions. (The French translation is in preparation.) Other background information on the concept of NSFR and structure and instructions for the data collection form are provided in the uploaded document.

Since it concerns test reporting, the data collection form is subject to changes, which may be made periodically. Test reporting on the additional monitoring tools is not part of this test reporting. FINMA will announce the beginning of the test reporting on the monitoring tools in the first semester of 2015.