The International Swaps and Derivatives Association (ISDA) published an assessment of the revised US Basel III endgame proposal, calling it a major improvement over the 2023 version and a step toward completing global capital reforms in the US. ISDA credits policymakers for incorporating changes it advocated for, which it says should improve risk sensitivity and avoid disproportionate increases in capital requirements, while noting the package remains complex and requires detailed analysis of calibration and market impacts. ISDA highlights changes intended to preserve the viability of internal models for market risk under the Fundamental Review of the Trading Book, including removal of the output floor and proposed adjustments to the profit-and-loss attribution test, the risk factor eligibility test and the capitalization of non-modellable risk factors, while warning additional issues still need resolution. On cross-product netting, it welcomes recognition of non-cleared derivatives and repo transactions in standardized approach for counterparty credit risk calculations, including clearing member-client trades, but argues the proposed methodology remains overly conservative and insufficiently risk-sensitive, including in its treatment of maturity mismatch. ISDA also points to the proposed exclusion of the client-facing leg of cleared trades from the credit valuation adjustment framework and the exclusion of clearing from the global systemically important bank surcharge as removing a flaw that would otherwise have increased capital by more than 80% for some client clearing activities. ISDA notes the consultation is open until June 18 and plans to work with members to scrutinize and test the proposal’s components to support a constructive response to US regulators.
ISDA 2026-03-30
International Swaps and Derivatives Association welcomes revised US Basel III endgame proposal and flags remaining concerns ahead of June 18 consultation close
The International Swaps and Derivatives Association (ISDA) published an assessment of the revised US Basel III endgame proposal, calling it a major improvement over the 2023 version that enhances risk sensitivity and avoids disproportionate capital increases, while remaining complex and needing further calibration analysis. ISDA welcomes preservation of internal models under the Fundamental Review of the Trading Book, adjustments to cross-product netting and counterparty credit risk, and exclusion of certain cleared trades from the credit valuation adjustment framework and the global systemically important bank surcharge, but still flags concerns over conservatism and risk sensitivity.