On June 18, ISDA, the Securities Industry and Financial Markets Association and the Institute of International Finance submitted a joint response to US agencies on proposed changes to the surcharge for global systemically important banks (G-SIBs).

The associations welcome the 2026 proposal as an improvement relative to the 2023 proposal, noting in particular that the revised proposal would not include client-cleared derivatives under the agency model in the complexity and interconnectedness categories of the G-SIB surcharge, which would have increased capital requirements for G-SIBs providing clearing services and been at odds with longstanding public policy objectives to promote central clearing.

The associations recommend the following further improvements:

• Derivatives exposures should not be included in the cross-jurisdictional activity indicator, as they are already captured in other systemic indicators, including size, interconnectedness and complexity. To the extent derivatives are included, exposures should be calculated net of collateral and centrally cleared derivatives should be excluded.
• The notional amount of over-the-counter derivatives should be averaged using monthly values rather than daily values to better reflect typical portfolio compression and risk-mitigation practices and avoid overstating notional amounts due to transient build-ups between compression cycles.
• Cross-jurisdictional activity claims and liabilities should be reported as the average of quarter-end values rather than month-end values to avoid operational complexity and maintain alignment with existing quarterly reporting requirements.
• Further consideration is needed before recognizing cross-product netting in the size and interconnectedness indicators, given the interaction with the supplementary leverage ratio framework and the evolving implications of the US Treasury clearing mandate.
• The standardized approach for counterparty credit risk alpha factor should not be included in the interconnectedness indicator, as it is a measure of capital conservatism rather than a reflection of a firm’s actual interconnectedness with other financial institutions.

Click on the PDF to read the full response.