The Institute of International Finance (IIF), the International Swaps and Derivatives Association, Inc. (ISDA) and the Securities Industry and Financial Markets Association (SIFMA) today submitted a joint comment letter to the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) on the proposed Basel III endgame capital rule governing Category I and II banking organizations and banking organizations with significant trading activity.
The letter addresses key aspects of the proposal relating to the Fundamental Review of the Trading Book (FRTB), credit valuation adjustment (CVA) risk and counterparty credit risk (CCR), including issues around securities financing transactions (SFTs), derivatives and the standardized approach for counterparty credit risk (SA-CCR).
“The calibration of the regulatory capital framework directly affects the pricing, availability and structure of market intermediation, client hedging, financing and liquidity services provided by large banking organizations. Capital requirements that are more risk sensitive better support market liquidity, reduce costs for end users seeking to hedge or finance positions and promote the efficient functioning of US capital markets, including the important market for US Treasury securities,” the organizations wrote in the letter.
The associations appreciate the agencies’ efforts to modernize and improve the risk sensitivity of the regulatory capital framework for large banking organizations. The proposal reflects a constructive step forward in several respects, particularly by recognizing the importance of calibration for capital markets and trading activities.
The associations’ recommendations are organized around three themes:
- enhancing risk sensitivity;
- enhancing consistency across the capital rules; and
- reducing unnecessary operational burdens.
The associations also recommend that the final rule be implemented with an effective date no earlier than January 1, 2028.
The IIF, ISDA and SIFMA comment letter can be found here.
For Press Queries, Please Contact:
Meghan Milloy, IIF, mmilloy@iif.com 601-466-5023
Christopher Faimali, ISDA London, +44 20 3808 9736, cfaimali@isda.org
Lindsay Gilbride, SIFMA, lgilbride@sifma.org 202-962-7390
Documents (1) for IIF, ISDA and SIFMA Submit Comment Letter on Basel III Endgame Proposal
Latest
Updated OTC Derivatives Compliance Calendar
ISDA has updated its global calendar of compliance deadlines and regulatory dates for the over-the-counter (OTC) derivatives space.
10 Years of the ISDA SIMM
As the derivatives industry prepared for the September 2016 implementation of initial margin requirements for non-cleared derivatives, one challenge stood out: counterparties needed to agree on the amount of initial margin to be exchanged. But if each firm developed its...
Expanding the Universe of Eligible VM
ISDA conducted a series of interviews with buy- and sell-side firms to understand the drivers of a growing use of non-cash assets as variation margin (VM) for non-cleared over-the-counter (OTC) derivatives and the barriers that remain to expanding the use...
ISDA Response on Hedge Accounting Guidance
On August 14, ISDA responded to an exposure draft from the Financial Accounting Standards Board (FASB). ISDA broadly supports the FASB’s proposed targeted improvements to hedge accounting, including allowing interest rate hedging of held-to-maturity (HTM) debt securities, recognizing all Secured...