| 2.2.B.1 |
Stakeholders requested flexibility in demonstrating retail ownership for structured notes and partnership deposits distributed via NBFIs. They proposed using third-party data indicators and attestations instead of daily client-level information to address privacy and operational concerns. |
We updated paragraph 54, replacing daily client identification requirements, with expectations for controls to identify and exclude any corporate/institutional ownership. Additionally, for retail structured notes, we added a footnote in paragraph 60, clarifying that retail eligibility may rely on the platform of distribution provided certain criteria are met. Deposits distributed through entities subject to host jurisdiction requirements will continue to follow the host treatment as per paragraph 145. |
| 2.2.B.1 |
Stakeholders noted that client behavior across structured notes is largely consistent and recommended using a single run-off rate rather than a tiered structure. |
We updated paragraph 60 such that institutions will apply a single 30% run-off rate to all retail structured notes that are not exchange-tradeable. This revision replaces the proposed tiered (20%/40%) rates, balancing simplicity, proportionality, and observed client behavior. |
| 2.2.B.1 |
Stakeholders proposed allowing a differentiated treatment for the retail-held portion of exchange-tradeable notes based on observable data from brokerage platforms. |
We updated paragraph 60 to specify that institutions will apply a 40% run-off rate to the portion demonstrably held by individual retail clients, while the remaining holdings will receive a 100% run-off rate. Retail eligibility should be supported by a look-through approach based on issuer-level distribution data, real-time client verification, and effective supervisory oversight. |
| 2.2.B.1 |
Stakeholders requested clarification on the treatment of deposits from partnerships, especially where the deposit structure is designed to mirror retail or operational characteristics. |
We modified paragraph 60 to clarify that institutions should classify partnership deposits under two new categories: (i) less stable partnership deposits assigned a 40% run-off rate and (ii) stable partnership deposits assigned a 15% run-off rate. These categories replace the previously proposed single treatment, providing a more granular and risk-sensitive approach that reflects deposit stability and contractual features. |
| 2.2.B.1 |
Stakeholders sought clarification on the scope of rate-sensitive retail deposits. |
We clarified in paragraph 55 that institutions will apply the definition of rate-sensitive deposits only to deposits with temporary promotional rates. We removed the reference to "where the interest rate paid significantly exceeds the average rate for similar retail products." |
| 2.2.B.1 |
Stakeholders asked for clarification on how to report funding instruments with market-based maturity triggers, such as autocallable notes. They requested confirmation that institutions may use model-based methodologies to project expected maturities. |
We modified paragraph 53 to clarify that institutions may derive the expected maturity (expected life) of autocallable notes from prudent and appropriate analysis, including for notes callable within 30 days. |
| 2.2.B.1 |
Stakeholders requested clarification that the 5% contingent obligation outflow applies only to instruments maturing beyond the 30-day liquidity coverage ratio horizon. They also questioned the application of such outflows given the issuer's ability to refuse early buy-back requests and lack of historical stress events affecting these products. |
We clarified in paragraph 120 that institutions should apply the 5% contingency funding outflow to all structured products with maturities beyond 30 days, where customers anticipate ready marketability. Further, the 5% contingency funding outflow should apply to all autocallable notes with expected lives beyond 30 days, regardless of the institutions' judgement around ready marketability. Applying the charge to autocallable notes where expected life is assumed for maturity ensures liquidity reserves are maintained for potential early redemptions. |
| General feedback |
Stakeholders expressed interest in engaging with us on broader modernization of LAR metrics, including high quality liquid asset eligibility, securities financing transactions, and delta one liquidity treatment. |
We welcome continued engagement with stakeholders as we consider future revisions to the LAR Guideline. |
