Basel III Endgame Blog Series

SIFMA supports appropriate regulation of the capital markets and their participants by both market regulators, who have decades of experience in promulgating rules and supervising the marketplace, as well as prudential regulators. U.S. prudential rules generally impose significantly higher capital and liquidity costs on banking entities with significant capital markets operations. This has increased costs to financial firms and the economy as a whole and reduced market depth for a wide variety of corporations and other end-users, particularly during periods of economic stress.

This has also had another effect: transforming U.S. banking regulators into the most impactful supervisors of the capital markets superseding the oversight role traditionally played by the SEC and CFTC. This has created distortions in the capital and liquidity requirements between market and prudential regulators as well as lessened the efficiencies by increasing costs to end users. It is thus crucial to align and allow for mutual recognition of, to the extent possible, the capital and liquidity standards set out by the U.S. banking regulators and the market regulators.

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