A group of financial industry trade associations expressed their support for a proposal by federal financial regulators to recalibrate the Enhanced Supplementary Leverage Ratio.
In a letter to the leadership of the Federal Reserve, Federal Deposit Insurance Corporation and the Comptroller of the Currency, the associations urged regulators to finalize the proposal as soon as possible, with an effective date no later than Jan. 1, 2026.
The policy goals of the proposal involve restoring the eSLR to its proper role as a backstop to risk-based capital requirements. They also include mitigating limitations on the ability of banking organizations to intermediate in U.S. Treasury markets. This is particularly pressing given the impending industry move to mandatory clearing for US Treasurys.
The trade associations said they would support further refinements to the leverage capital requirements to achieve those policy goals to an even greater extent. However, they added that any further refinements should not delay a final rule being effective by January 1.
The letter was sent by the International Swaps and Derivatives Association, the Securities Industry and Financial Markets Association, and the Futures Industry Association.
The associations also said that the agencies should conduct a comprehensive review of the US regulatory capital framework and based on that review, implement appropriate reforms.
The reforms should recognize that the current framework has pushed activity outside of the banking sector and reflect changes to avoid that dynamic.