Associations Object To Proposed Revisions To The Basel III Leverage Ratio Framework

In a detailed letter to the Basel Committee on Banking Supervision (the "BCBS"), several financial services associations (collectively, the "Associations") objected to the treatment of cash and cash equivalents in proposed revisions to the Basel III leverage ratio framework (the "LR"). The group was composed of five participating associations: The Global Financial Markets Association, the Institute of International Finance, ISDA, Japan Financial Markets Council and The Clearing House.

The Associations cited an analysis of the LR that was written by the Bank of England's Financial Policy Committee and expressed strong concerns about the inclusion of central bank cash balances in the leverage ratio. The analysis indicated that this inclusion would affect the ability of banks to maintain the necessary liquidity for market functions.