ISDA, the Securities Industry and Financial Markets Association (SIFMA) and FIA have submitted a joint comment letter to the Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency strongly supporting the proposed recalibration of the enhanced supplementary leverage ratio (eSLR) and related total loss-absorbing capacity (TLAC) and long-term debt (LTD) requirements.

“We fully support these policy goals – that is, helping to restore the eSLR to its proper role as a backstop to risk-based capital requirements and mitigating limitations on the ability of banking organizations to intermediate in US Treasury markets, which is particularly pressing given the impending industry move to mandatory clearing for US Treasuries,” ISDA. SIFMA and FIA wrote in the letter.

The associations emphasized the urgency of finalizing and implementing the rule no later than January 1, 2026.

Key points from the letter include:

• Support for Proposal: The recalibration would reduce the likelihood that the eSLR serves as a binding constraint, restoring its intended role as a backstop and enhancing participation in low-risk, high-volume activities such as US Treasury intermediation.
• Market Functioning: Properly calibrated leverage rules are essential to ensure liquidity and resilience in US Treasury markets, particularly as mandatory clearing expands.
• Broader Framework Review: The agencies should conduct a comprehensive review of the US regulatory capital framework to ensure it promotes growth, mitigates risks and reflects risk-reducing practices such as cross-product netting.
• Further Enhancements: The associations recommend recognition of cross-product netting under the standardized approach, consideration of reforms to Tier 1 leverage ratio requirements and elimination of redundant LTD requirements for US global systemically important banks.

The associations conclude that their recommendations would make the US regulatory capital framework more risk-sensitive, efficient and better aligned with broader economic policy objectives, stating: “We are strongly committed to maintaining the safety and efficiency of US financial markets and hope the agencies implement our recommendations, which reflect the extensive knowledge and experience of market professionals within the associations and our members.  Our recommendations are designed to make the US capital framework more risk sensitive to promote the functioning of the framework across market conditions and throughout the business cycle.”

The letter is available here.

For Press Queries, Please Contact:

Christopher Faimali, ISDA London, +44 20 3808 9736, CFaimali@isda.org

Lindsay Gilbride, SIFMA, +1 202.962.7390,  lgilbride@sifma.org

Mark Hayes, FIA, +1 202.466.5460, mhayes@fia.org