13.1 In CP5/21, the PRA consulted on proposals to implement the net stable funding ratio (NSFR).

13.2 The NSFR is intended to help ensure that firms maintain a stable funding profile in relation to the composition of their assets and off-balance sheet activities. The NSFR focuses on protecting against liquidity risks over a longer horizon than the LCR metric.

13.3 The PRA proposed to:

• introduce an NSFR framework that implements the Basel III standard, including new definitions applicable to the NSFR and specifying available stable funding (ASF) and required stable funding (RSF) factors;

• introduce a simplified NSFR (sNSFR) framework for small and non-complex firms; and

• introduce new regulatory permissions applicable to the NSFR, alongside a new 'Liquidity and funding permissions' SoP.

13.4 The PRA also proposed to make consequential changes to SS24/15 'The PRA's approach to supervising liquidity and funding risks' to reflect the introduction of the NSFR.

General comments

13.5 Five respondents generally supported the PRA's proposed rules and their intended outcome: to ensure that firms have sufficient diverse and stable funding under normal and stressed conditions.