On August 26, ISDA, the Securities Industry and Financial Markets Association (SIFMA) and FIA submitted a joint comment letter to the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), expressing strong support for the proposed recalibration of the Enhanced Supplementary Leverage Ratio (eSLR) and the related total loss-absorbing capacity (TLAC) and long-term debt (LTD) requirements. The proposed changes aim to restore the eSLR’s role as a backstop to risk-based capital requirements and to ease constraints on banking organizations’ ability to intermediate in US Treasury markets—a concern that is increasingly urgent with the upcoming transition to mandatory clearing for US Treasuries.
The comment letter emphasizes the importance of finalizing and implementing the rule by January 1, 2026.
Key points from the comment letter include:
- Support for Recalibration: The proposal would reduce the likelihood of the eSLR becoming a binding constraint, thereby reinforcing its intended backstop function and improving participation in low-risk, high-volume activities like US Treasury intermediation.
- Market Functioning: Appropriately calibrated leverage requirements are critical to maintaining liquidity and resilience in US Treasury markets, especially as mandatory clearing expands.
- Comprehensive Framework Review: The agencies should undertake a broader review of the US regulatory capital framework to ensure it supports economic growth, appropriately mitigates risk, and reflects sound risk-reducing practices such as cross-product netting.
- Further Improvements: The associations recommend recognizing cross-product netting under the standardized approach, reconsidering Tier 1 leverage ratio requirements, and eliminating redundant LTD requirements for US global systemically important banks.
These recommendations are intended to make the US regulatory capital framework more risk-sensitive, efficient, and better aligned with broader financial and economic policy goals.
Documents (1) for Joint Letter on Enhanced Supplementary Leverage Ratio Reforms
Latest
Response to BoE on Systemic Stablecoins
On February 10, ISDA responded to the Bank of England’s (BoE) consultation on a proposed regulatory regime for sterling-denominated systemic stablecoins. In the response, ISDA highlights that any regulatory framework should be assessed through the lens of prudent risk management...
SwapsInfo Full Year 2025 and Q4 2025
Trading activity in interest rate derivatives (IRD) and credit derivatives increased in 2025, reflecting shifting monetary policy expectations and broader market conditions. IRD traded notional rose by about 46% year-on-year, led by an increase in overnight index swaps (OIS). Index...
ISDA ALF: Katherine Tew Darras Opening Remarks
ISDA Annual Legal Forum London, February 11, 2026 Opening Remarks Katherine Tew Darras ISDA General Counsel Good morning and welcome to ISDA’s Annual Legal Forum. Thank you for joining us today and thanks to our platinum sponsors – Cleary...
Maintaining Focus on Basel III Endgame Recalibration
In its original form, the US Basel III endgame proposal would have resulted in disproportionate increases in capital for trading book activities, forcing banks to make difficult choices about their participation in certain businesses. After two-and-a-half years, a revised proposal...
