2.110 In CP4/23, the PRA proposed to introduce a new Retail Deposit Ratio (RDR), which would be used to measure firms' usage of retail funding. The CP proposals reflected the PRA's view that firms with a four-quarter moving average RDR above 50% for four consecutive quarters would be able to meet the PRA's standards around the resiliency of funding currently represented by the Net Stable Funding Ratio (NSFR), without needing to monitor the NSFR itself. CP4/23 also proposed the removal of the simplified NSFR and a minor correction to rule references in the NSFR reporting instructions (which would apply to all firms that report the NSFR).

2.111 Six respondents supported the PRA's NSFR proposals for firms meeting the RDR condition. Four respondents specifically supported the introduction of the RDR. Four respondents supported the proposal to use a four-quarter moving average for the RDR threshold, and three respondents supported the threshold being set at 50%. One respondent noted that whilst they supported the RDR, they felt the assumptions used to construct the RDR could be more granular. In particular, with respect to the retail funding mix and the varying stability of retail deposits. Two respondents agreed that the proposed one-year implementation period where a firm breached the RDR limit was appropriate. One respondent noted that they agreed a firm should have to notify the PRA if it breaches the RDR limit.

2.112 One respondent noted that although they favoured the use of the Article 411(2) definition of retail deposits for calculating the RDR, there were several other elements the PRA could consider. They suggested the following elements: