Federal banking regulators are proposing new disclosure requirements in an effort to boost transparency of the big banks’ funding risks.
The Office of the Superintendent of Financial Institutions (OSFI) published draft guidance today that will introduce new disclosure requirements for the banks that have been deemed systemically important to Canada’s financial system. The draft guidance sets out requirements for the banks to publicly disclose their net stable funding ratios (NSFR).
According to OSFI, the banks currently lack guidance on the public disclosure of their NSFR positions. “The absence of robust NSFR disclosures reduces transparency and may inhibit public confidence with respect to their funding risks,” OSFI stated in a release.
The proposed draft guidance aims to provide transparency into the banks’ funding risk, “thereby encouraging comparability and market discipline over this key metric.”
The proposals, which are out for comment until March 15, would require NSFR disclosure to start in the quarter ended Jan. 31, 2021.