SIFMA today released the following statement from Kenneth E. Bentsen, Jr., SIFMA president and CEO, on the need for policymakers to examine exempting Treasuries from leverage ratios to enhance market resiliency:
“Bank-affiliated brokers-dealers are key intermediaries in the U.S. Treasury market. Current capital rules require banks to meet risk-based requirements and two leverage ratios. These leverage ratios, being non-risk-sensitive, often become binding constraints during flight to quality or dash for cash episodes, causing brokers-dealers to reduce their market intermediation activities at just the wrong time. With U.S. Treasury issuance set to grow rapidly, and with the current volatility in the market top of mind, we urge policymakers to exempt Treasuries and central bank deposits from leverage ratio calculations going forward to ensure banks can effectively intermediate the Treasury market.”
In April, SIFMA submitted letters to relevant regulators further expanding on these views, which can he found here.
