Regulatory Capital: Category I and II Banking Organizations, Banking Organizations with Significant Trading Activity, and Optional Adoption for Other Banking Organizations

The Secured Finance Network (SFNet), a trade association representing financial institutions in asset-based lending, opposes the proposed rules because they fail to recognize the risk-mitigating value of nonfinancial collateral like receivables and inventory. They argue that the proposal will increase capital costs, discourage banks from providing vital working capital to small and medium-sized businesses, and ultimately harm the U.S. economy.

The Prime Mover Institute, a public interest organization, supports the proposed rule as a step toward objective, risk-based banking and ending "debanking" practices. They argue that the rule should include specific guardrails to prevent banks from using biased climate risk assessments to unfairly increase capital costs for energy-intensive industries.

BlackRock, Inc. supports the proposed revisions to the U.S. capital framework to enhance risk sensitivity and transparency while aligning with Basel standards. However, they recommend specific adjustments to the risk-weighting of closed-end funds, business development companies, and high-quality project finance to avoid imposing undue costs or inhibiting financial intermediation.

The Coalition for Derivatives End-Users, representing 94 companies and municipalities, opposes the proposed capital requirements because they impose undue costs on commercial hedging and create regulatory redundancies. They specifically argue for exemptions for commercial end-users from CVA risk capital requirements and the retention of the SA-CCR alpha multiplier to maintain a competitive advantage for U.S. firms.

The Committee on Capital Markets Regulation, an independent research organization, broadly supports the proposed Basel III "finalization" reforms to improve the alignment of capital requirements with bank risks. They argue that the proposals will enhance the ability of banks to support U.S. financial markets and the real economy while maintaining a resilient capital framework.

Cboe Global Markets expresses support for the proposed revisions to the regulatory capital framework, particularly the exclusion of derivative exposures from client clearing from the CVA capital charge and the allowance for netting certain contracts. However, the organization requests further revisions to allow the decomposition of index and ETF options to avoid unnecessary capital charges for market makers.

The Structured Finance Association (SFA) opposes several provisions in the proposed rules, specifically the addition of the word "solely" to the definitions of traditional and synthetic securitization, which they argue creates unnecessary capital burdens and violates the Administrative Procedure Act. They also request clarifications on the BCC 13-2 interpretive framework and argue against a 100% risk weight floor for certain senior resecuritizations.

Mortgage Guaranty Insurance Corporation (MGIC), a monoline mortgage insurer, supports the proposed action but argues for specific improvements to the risk-based capital requirements. They advocate for expanded recognition of the loss-mitigating benefits of mortgage insurance (MI) and a pathway for well-capitalized monoline MI companies to qualify for the "corporate" 65% risk weight.

The American Council of Life Insurers (ACLI) supports the proposed revisions to the Basel III Endgame capital framework, commending the agencies' responsiveness to stakeholder feedback. They request three specific refinements to improve risk sensitivity: providing flexibility for Category III and IV banks regarding investment-grade corporate exposures, recalibrating the CVA risk framework to distinguish between regulated and unregulated financials, and clarifying the treatment of insurer separate accounts as corporate exposures.

The Options Clearing Corporation (OCC) generally supports the proposed regulatory capital rule, specifically praising the treatment of client-facing STM derivatives and the net basis for the noninterest component of the business indicator. However, the OCC requests specific clarifications and revisions to ensure that the rule does not discourage the use of central clearing, including requests for functional equivalence for certain non-linear index contracts and agreement-specific allocation factors for cross-margining.