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.