Federal Reserve and OCC extends comment period
21 May 2018 Washington DC
Image: Shutterstock
The Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) have extended comment for proposed rule tailoring leverage ratio requirements.
Agencies extended the comment period to allow interested persons more to time to prepare their comments, which were originally due today but are now extended to 25 June.
Currently, firms that are required to comply with the “enhanced supplementary leverage ratio” are subject to a fixed leverage standard, regardless of their systemic footprint.
The new proposal would instead tie the standard to a firm’s risk-based capital surcharge, which is based on a firm’s own individual characteristics.
This would tailor leverage ratio requirements to the business activities and risk profiles of the largest domestic firms.
The Fed said that the proposed changes seek to retain a meaningful calibration of the enhanced supplementary leverage ratio standards while not discouraging firms from participating in low-risk activities.
The changes also correspond to recent changes proposed by the Basel Committee on banking supervision.
Taking into account supervisory stress testing and existing capital requirements, agency staff estimate that the proposed changes would reduce the required amount of tier 1 capital for the holding companies of these firms by approximately $400 million, or approximately 0.04 percent in aggregate tier 1 capital.
Enhanced supplementary leverage ratio standards apply to all US holding companies identified as global systemically important banking organisations and to the insured depository institution subsidiaries of those firms.
Agencies extended the comment period to allow interested persons more to time to prepare their comments, which were originally due today but are now extended to 25 June.
Currently, firms that are required to comply with the “enhanced supplementary leverage ratio” are subject to a fixed leverage standard, regardless of their systemic footprint.
The new proposal would instead tie the standard to a firm’s risk-based capital surcharge, which is based on a firm’s own individual characteristics.
This would tailor leverage ratio requirements to the business activities and risk profiles of the largest domestic firms.
The Fed said that the proposed changes seek to retain a meaningful calibration of the enhanced supplementary leverage ratio standards while not discouraging firms from participating in low-risk activities.
The changes also correspond to recent changes proposed by the Basel Committee on banking supervision.
Taking into account supervisory stress testing and existing capital requirements, agency staff estimate that the proposed changes would reduce the required amount of tier 1 capital for the holding companies of these firms by approximately $400 million, or approximately 0.04 percent in aggregate tier 1 capital.
Enhanced supplementary leverage ratio standards apply to all US holding companies identified as global systemically important banking organisations and to the insured depository institution subsidiaries of those firms.
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