SIFMA Testimony on Endgame, Capital


On Sep. 25, SIFMA published testimony on bank capital requirements.


  • SIFMA president/CEO discussed bank capital requirements in testimony before House.
  • The testimony was delivered before the U.S. House of Representatives Financial Services Committee Financial Institutions and Monetary Policy Subcommittee.
  • Testimony Summary
  • Noted bank capital requirements have material impacts across the entire economy.
  • Crucial that policymakers, including Congress, conduct sufficient analysis to ensure bank capital requirements balance both financial stability and macroeconomic growth.
  • Capital levels are already robust and any further proposed increases should be sufficiently scrutinized to determine both the tangible benefits and costs to economy.
  • Noted SIFMA's deep concern with the Basel III Endgame proposal as it was issued and highlighted key recommendations while policymakers prepare to issue a re-proposal.
  • Also addressed tress testing reforms, GSIB surcharge, long-term debt proposals and FDIC’s recent proposal to revise the regulations surrounding brokered deposits.
  • Basel III Endgame Recommendations
  • Any re-proposal should account for overlaps with other prudential requirements.
  • Account for interactions between Global Market Shock (GMS) and FRTB frameworks.
  • Give greater credit for diversification under modeled and standardized FRTB approach.
  • Adjustments to capital requirements for modellable risk factors and non-modellable risk factors needed in the FRTB portion of the proposal, in addition to P&L loss test.
  • Client-facing client-cleared derivatives transactions excluded from scope of the CVA.
  • Over-the-counter derivatives transactions with commercial end-users need to receive more favorable treatment in the final U.S. rule to align treatment with EU and UK.
  • Revise risk incentives that discourage large banks from securitization activities.
  • Remove securities financing transactions (SFT) haircut framework from the proposal.
  • Analyze investment grade counterparties and collateral and operational risk.
  • Provide more clarity around timeline, with a recommendation of at least 18 months from completion of the final rule, for firms to begin implementing the new framework.

Regulators SIFMA
Entity Types Bank; BHC; SIFI; Thrift
Reference PR, Sp, 9/25/2024
Functions Compliance; Financial; Legal; Reporting; Risk; Trading; Treasury
Countries United States of America
Category Trade Association
State
Products Banking; Clearing; Derivatives; Equity; Securities
Regions Am
Rule Type Guidance
Rule Date 9/25/2024
Effective Date 9/25/2024
Rule Id 227639
Linked to N/A
Reg. Last Update 9/25/2024
Report Section US Investment

Last substantive update on 09/30/2024