European Commission proposes to maintain CRR net stable funding ratio relief for short-term securities financing and unsecured lending beyond June 2025

The European Commission has tabled a targeted amendment to the Capital Requirements Regulation (CRR) to extend the current net stable funding ratio (NSFR) treatment for certain short-term securities financing transactions (SFTs) and unsecured lending with financial counterparties beyond 28 June 2025. The proposal would keep lower liquidity requirements than those implied by Basel III to support EU market liquidity, including for government and NextGenerationEU bonds, and to preserve a level playing field for EU banks. The transitional NSFR calibration applies to SFTs and unsecured transactions with a maturity of less than six months. Without an EU extension, required stable funding factors would rise from 0% to 10% for SFTs collateralised by very high-quality assets such as sovereign debt, from 5% to 15% for SFTs backed by other assets, and from 10% to 15% for unsecured lending. The Commission proposes applying the maintained treatment from 29 June 2025 to ensure continuity and avoid legal uncertainty, and states that no specific industry preparations would be needed because the proposal maintains the current situation. The proposal will be reviewed by the European Parliament and the Council and would enter into force once agreed and published in the Official Journal of the European Union. It also mandates the European Banking Authority to report by 31 January 2029, and every five years thereafter, on the implications of maintaining the treatment.