Chief Counsel’s Office
Office of the Comptroller of the Currency
400 7th Street, SW, Suite 3E-218
Washington, D.C. 20219

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

Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS Federal Deposit Insurance Corporation
550 17th Street, NW
Washington D.C. 20429

Re: Regulatory Capital Treatment for Investments in Certain Unsecured Debt Instruments of Global Systemically Important U.S. Bank Holding Companies, Certain Intermediate Holding Companies, and Global Systemically Important Foreign Banking Organizations (Docket ID OCC–2018–0019 and RIN1557–AE38; FRB Docket No. R–1655 and RIN 7100– AF43; FDIC RIN 3064–AE79)

Ladies and Gentlemen:

The Securities Industry and Financial Markets Association (“SIFMA”) appreciates the opportunity to comment on the notice of proposed rulemaking (the “Proposal”)1 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 Federal Reserve and FDIC, the “Agencies”), that would address the regulatory capital treatment of an advanced approaches banking organization’s holdings of certain unsecured debt instruments (“covered debt instruments”) issued by global systemically important banking organizations (“G-SIBs”) and certain subsidiaries thereof, including debt instruments issued for purposes of meeting minimum total loss absorbing capacity (“TLAC”) and, where applicable, long-term debt (“LTD”) requirements, and unsecured debt instruments issued by G-SIBs that are pari passu or subordinated to such debt instruments. We fully support the letter that we have submitted in response to the Proposal jointly with the Bank Policy Institute (the “Joint Letter”). We would like to take the opportunity in this letter, however, to further stress the importance of ensuring that the Proposal’s framework for market making is effective and efficient and to propose specific revisions to that framework.

The Agencies note in the preamble to the Proposal that they expect it “will have the benefit of improving the resiliency and enhancing the resolvability of advanced approaches banking organizations in the event that an entity required to issue LTD or TLAC fails or encounters material financial distress.”2 The Proposal is also intended to be complementary to existing capital requirements aimed at reducing interconnectedness and related contagion risk among banking organizations by limiting the extent to which they can invest in capital instruments of other financial institutions.

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