Joint Trades on LISCC Draft SR Comment Letter
Summary
SIFMA and joint trades provided comments on the draft SR Letter issued by the Board of Governors of the Federal Reserve System defining the financial institutions subject to the Large Institution Supervision Coordinating Committee supervisory program as institutions subject to Category I standards under the Board’s tailoring framework, as well as the Board’s request for input on the appropriate criteria for including international banks in the LISCC program in the future should the risk of their U.S. operations increase.
Excerpt
December 7, 2020
Via electronic mail
Ann E. Misback, Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue NW
Washington, DC 20551
Re: Input on Draft SR Letter Clarifying the Firms Subject to the Large Institution Supervision Coordinating Committee (“LISCC”) Supervisory Program
Ladies and Gentlemen:
The Securities Industry and Financial Markets Association (“SIFMA”), the Institute of International Bankers (“IIB”), the Bank Policy Institute (“BPI”), and the American Bankers Association (“ABA”) 1 appreciate the opportunity to comment on the draft SR Letter issued by the Board of Governors of the Federal Reserve System (the “Board”) defining the financial institutions subject to the Large Institution Supervision Coordinating Committee (“LISCC”) supervisory program as institutions subject to Category I standards under the Board’s tailoring framework, as well as the Board’s request for input on the appropriate criteria for including international banks in the LISCC program in the future should the risk of their U.S. operations increase.2
We strongly support the Board’s decision to define the financial institutions subject to the LISCC program as any firm subject to Category I tailoring standards and recommend it continue to use this same applicability definition when it updates the draft SR Letter prior to March 31, 2021. We also outline additional applicability criteria that the Board could consider should the risk of any international bank’s U.S. operations significantly increase in the future.
Decision Appropriately Reflects the Reduced Size and Risk Profile of the LISCC International Banks
The Board’s decision provides a transparent and simplified approach that is grounded in regulation and prior tailoring efforts, which we support. It is also fully consistent with the intentions of Section 165 of the Dodd-Frank Act3 , which empowered the Board to establish enhanced regulatory standards for “large, interconnected financial institutions” that “are more stringent than the standards…applicable to [financial institutions] that do not present similar risks to the financial stability of the United States” and “increase in stringency” in proportion to the systemic importance of the financial institution in question.