US plans to ease capital rule limiting bank treasury trades | Forexlive

As background to this, a couple of months ago news hit that US regulators are planning to ease a capital rule, specifically the supplementary leverage ratio (SLR), that limits how much banks can hold in Treasury securities. In brief:

• This move aims to boost liquidity in the $29 trillion Treasury market and reduce borrowing costs for the government.
• The SLR, introduced after the 2008 crisis, requires banks to hold a certain amount of capital against their total leverage exposure, including assets like Treasuries.
• The proposed change would likely exclude Treasuries and central bank deposits from the SLR calculation, allowing banks to hold more of these low-risk assets without impacting their capital requirements.

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Bloomberg have popped up an update to this, again in brief:

• US regulators are considering changes to a key capital rule for major banks, according to people familiar with the matter.
• The Federal Reserve, Federal Deposit Insurance Corp (FDIC), and Office of the Comptroller of the Currency are reviewing adjustments to the enhanced supplementary leverage ratio (eSLR) — a rule that applies to the largest U.S. banks, including JPMorgan Chase, Goldman Sachs, and Morgan Stanley.
• Under the proposal, the capital requirement for bank holding companies could be reduced to a range of 3.5% to 4.5%, down from the current 5%. The banks’ operating subsidiaries would likely see their requirements fall to the same range, compared to the existing 6%, the sources said, speaking on condition of anonymity due to the non-public nature of the discussions.

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