In remarks at the Atlantic Council 2026 CEO & Senior Management Summit, Federal Reserve Board Vice Chair for Supervision Michelle W. Bowman presented an initial assessment that the recalibrated enhanced supplementary leverage ratio has expanded large bank dealers’ balance sheet capacity and improved U.S. Treasury market functioning. The rule, finalized with the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency in November 2025, replaced the fixed 2% buffer for U.S. global systemically important banks with a buffer equal to 50% of each bank’s method 1 systemic surcharge. For depository institution subsidiaries, the buffer is subject to a 1% cap. The changes took effect April 1, 2026, although seven of the eight affected banks adopted them early in the first quarter. Estimates indicate that the parent holding companies of six dealers gained nearly USD 5 trillion in aggregate eSLR headroom in the first quarter. Supervisory data show dealers’ Treasury positions rose from about USD 600 billion at the start of the modification period to more than USD 700 billion by the end of April, with the increase concentrated among banks that had the lowest buffers under the previous rule. Bowman also cited market feedback linking the recalibration to greater Treasury and repo activity, narrower bid ask spreads, calmer funding conditions and greater price stability during periods of elevated supply. She argued that the additional capacity should be particularly valuable during market stress, when binding leverage constraints could otherwise limit dealer intermediation.
Federal Reserve Board Vice Chair Bowman reports early Treasury market gains from eSLR recalibration
Federal Reserve Board Vice Chair for Supervision Michelle W. Bowman reported that the recalibrated eSLR has expanded large bank dealers’ capacity and improved Treasury market functioning. Six dealer parent companies gained an estimated USD 5 trillion in aggregate headroom in the first quarter, while dealers’ Treasury positions rose from about USD 600 billion to more than USD 700 billion by the end of April. The largest increases occurred at banks most constrained by the previous rule.