Fed Capital Rule Change Takes Effect April 1: Treasury Market Impact
The biggest US banks just got more room to trade Treasuries.
What Changed
On April 1, 2026, the federal bank regulatory agencies' joint final rule modifying regulatory capital standards took effect. The rule adjusts the Enhanced Supplementary Leverage Ratio (eSLR) for US Global Systemically Important Bank Holding Companies (GSIBs) and their subsidiary depository institutions. The modification reduces disincentives for the largest banks to engage in lower-risk activities like intermediating in US Treasury markets. Conforming changes also apply to total loss-absorbing capacity and long-term debt requirements.
Who It Affects
US GSIBs and their subsidiaries, Treasury market participants, government securities dealers, and any institution whose operations involve leverage ratio capital calculations. The rule applies to roughly eight of the largest US bank holding companies.
What to Do
If you are a GSIB or subsidiary, ensure your capital calculations reflect the modified eSLR standards as of April 1. Treasury desk risk models should be updated to reflect the expanded capacity for intermediation activity.
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