August 26, 2025

Ann Misback
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue N.W.
Washington, D.C. 20551

Jennifer M. Jones
Deputy Executive Secretary
Federal Deposit Insurance Corporation
17th Street, N.W.
Washington, D.C. 20429
Attention: Comments/Legal OES (RIN 3064-AG11)

Chief Counsel’s Office
Office of the Comptroller of the Currency
400 7th Street, S.W., Suite 3E-218
Washington, D.C. 20219
Attention: Comment Processing

Re: Regulatory Capital Rule: Modifications to the Enhanced Supplementary Leverage Ratio Standards for U.S. Global Systemically Important Bank Holding Companies and Their Subsidiary Depository Institutions; Total Loss-Absorbing Capacity and Long-Term Debt Requirements for U.S. Global Systemically Important Bank Holding Companies

Federal Reserve: Docket No. R-1867, RIN 7100-AG96
FDIC: RIN 3064-AG11
OCC: Docket ID OCC –2025-006, RIN 1557-AF31

Dear Sir/Madam,

The International Swaps and Derivatives Association, Inc. (“ISDA”), the Securities Industry and Financial Markets Association (“SIFMA”) and the Futures Industry Association (“FIA” and, collectively with ISDA and SIFMA, the “Associations”) welcome the opportunity to comment on the proposal referenced above (the “Proposal”) issued by the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Federal Deposit Insurance Corporation (the “FDIC”) and the Office of the Comptroller of the Currency (the “OCC” and, collectively with the FDIC and the Federal Reserve, the “Agencies”).¹ The Proposal would modify the enhanced supplementary leverage ratio requirements (the “eSLR”) applicable to (i) U.S. top-tier bank holding companies that are identified as U.S. global systemically important bank holding companies (“GSIB”) and (ii) their subsidiary depository institutions. The Proposal also would modify the Federal Reserve’s total loss-absorbing capacity (“TLAC”) leverage buffer and leverage-based long-term debt (“LTD”) requirements that are applicable to U.S. GSIBs.

Executive Summary

• The Associations strongly support the proposed recalibration of the eSLR and the conforming changes to the TLAC and LTD requirements. The Associations urge the Agencies to finalize the proposal as soon as possible, with an effective date no later than January 1, 2026.
• We fully support these policy goals – that is, (1) helping to restore the eSLR to its proper role as a backstop to risk-based capital requirements and (2) mitigating limitations on the ability of banking organizations to intermediate in U.S. Treasury markets, which is particularly pressing given the impending industry move to mandatory clearing for U.S. Treasuries.
• Moving promptly is critical for achieving these goals, which is why we strongly support finalization and an effective date no later than January 1, 2026. Moreover, the Associations would support further refinements to leverage capital requirements to achieve those policy goals to an even greater extent. Any further refinements, however, should not delay a final rule being effective by January 1, 2026.
• More broadly, consistent with Vice Chair for Supervision Bowman’s recent comments, the Agencies should conduct a comprehensive review of the U.S. regulatory capital framework and, based on that review, implement appropriate reforms.² These reforms should recognize that the current framework has pushed activity outside of the banking sector and reflect changes to avoid that dynamic. Treasury Secretary Bessent has noted that “risks may be moving to pockets of the financial system that are not well positioned to bear them” and that the Financial Stability Oversight Council (“FSOC”) “has an important role in facilitating the development of a strong, coordinated approach that both stimulates growth and mitigates material risks.”³ The Agencies should coordinate with the Treasury Department and other FSOC member agencies, as appropriate, to design a regulatory capital framework that addresses the broader economic policy concerns and goals raised by Secretary Bessent. For example, the Agencies should make changes to recognize the risk-reducing benefits of cross-product netting and cross-margining arrangements. The Associations have included a limited number of select enhancements for additional reforms in the Appendix to this letter focusing in particular on addressing the concerns raised above.

This Proposal is directly relevant to the broader policy objective of ensuring the regulatory framework stimulates growth and mitigates material risks. In particular, the U.S. regulatory capital framework, and specifically the leverage-based capital requirements, have a direct impact on the functioning of the U.S. capital markets, including the U.S. Treasury market. The U.S. capital markets are essential to the continued economic and financial success of American households and businesses. Relatedly, the U.S. Treasury market—which is widely viewed as the deepest and most important market globally—plays a critical role in facilitating the Federal Reserve’s monetary policy, financing the U.S. government, serving as a benchmark with respect to the valuation of a variety of financial instruments and providing a safe and liquid investment.⁴

Banking organizations are integral to the liquidity and overall functioning of the U.S. Treasury market and related financing markets, in particular through acting as trading counterparties to the Federal Reserve Bank of New York, participating in auctions of new U.S. Treasury issuances as primary dealers and intermediating U.S. Treasury market transactions in the cash and repurchase and reverse repurchase (“repo”) markets.⁵ These bank intermediation activities will need to be expanded and strengthened to address the increased volume of U.S. Treasury transactions, including the expanded scope that will be subject to mandatory clearing as a result of the Treasury clearing mandate issued by the U.S. Securities and Exchange Commission (the “SEC”).⁶ However, under the current U.S. regulatory capital and leverage ratio frameworks, banking organizations face substantial constraints in performing these intermediation functions given the inappropriate calibration of prudential requirements.

The Proposal highlights the importance of banking organizations as investors in U.S. Treasury securities and focuses on the amount of U.S. Treasury securities that banking organizations hold to support U.S. Treasury intermediation. The Associations also would equally highlight the importance of financing activity, as reflected in the following chart.

1. Federal Reserve, FDIC, OCC, Regulatory Capital Rule: Modifications to the Enhanced Supplementary Leverage Ratio Standards for U.S. Global Systemically Important Bank Holding Companies and Their Subsidiary Depository Institutions; Total Loss-Absorbing Capacity and Long-Term Debt Requirements for U.S. Global Systemically Important Bank Holding Companies, 90 Fed. Reg. 30,780 (Jul. 10, 2025). [↩]
2. See Federal Reserve Vice Chair for Supervision Michelle W. Bowman, Unintended Policy Shifts and Unexpected Consequences, p. 13 (June 23, 2025), available at https://www.federalreserve.gov/newsevents/speech/files/bowman20250623a.pdf (“[The eSLR] proposal takes a first step toward what I view as long overdue follow-up to review and reform what have become distorted capital requirements. This proposal, while meaningful, addresses only one element of the capital framework. More work on capital requirements remains, especially to consider how they have evolved and whether changes in market conditions have revealed issues that should be addressed.”). [↩]
3. Financial Stability Oversight Council, Minutes of the Financial Stability Oversight Council, p. 4 (Mar. 20, 2025), available at https://home.treasury.gov/system/files/261/FSOC_20250320_Minutes.pdf. [↩]
4. 90 Fed. Reg. at 30,791, fn. 54. [↩]
5. See, e.g., Jerome H. Powell, Statement on Enhanced Supplementary Leverage Ratio Proposal (June 25, 2025), available at https://www.federalreserve.gov/newsevents/pressreleases/powell-statement-20250625.htm (“Because banks play an essential intermediation role in the Treasury market, we want to ensure that the leverage ratio does not become regularly binding and discourage banks from participating in low-risk activities, such as Treasury market intermediation.”); Letter from Scott O’Malia, Chief Executive Officer of ISDA to the Federal Reserve, the FDIC and the OCC, SLR Reform – U.S. Treasuries (Mar. 5, 2024), available at https://www.isda.org/a/h3sgE/ISDA-Submits-Letter-to-US-Agencies-on-SLR-Reform.pdf (the “ISDA SLR Letter”). [↩]
6. SEC, Standards for Covered Clearing Agencies for U.S. Treasury Securities and Application of the Broker-Dealer Customer Protection Rule With Respect to U.S. Treasury Securities, 89 Fed. Reg. 2,714 (Jan. 16, 2024). [↩]