A proposed rule to amend the supplementary leverage ratio of the regulatory capital rule to allow custodial banks to exclude qualifying deposits at central banks from their supplementary leverage ratio, as directed by last year’s regulatory relief law, has the sign-off of all three banking regulators and should be published soon in the Federal Register.
The proposal, with a 60-day public comment period, is being issued jointly by the Federal Reserve Board, Federal Deposit Insurance Corp. (FDIC), and Office of the Comptroller of the Currency (OCC). The proposal was initially announced in late March by FDIC.
The proposed rule would implement section 402 of the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S.2155); that portion of the law directs the federal banking agencies to exclude funds deposited with certain central banks from the supplementary leverage ratio calculation for custodial banking organizations. The supplementary leverage ratio applies only to certain large or internationally active banking organizations.
The impact of the proposal would be limited to a small handful of institutions, according to information include in the agencies’ joint release Thursday. In that release, they said that based on data available at the time of the proposal, only The Bank of New York Mellon Corporation, Northern Trust Corporation, and State Street Corporation, together with their depository institution subsidiaries, would be considered predominantly engaged in custody, safekeeping, and asset servicing activities and therefore able to exclude deposits at central banks from their supplementary leverage ratio.
Agencies seek comment on revisions to the supplementary leverage ratio as required by Economic Growth, Regulatory Relief, and Consumer Protection Act