Modernizing Financial Regulation: Initial Observations from eSLR

What happened

On October 01, 2026, Vice Chair for Supervision Michelle W. Bowman spoke at the Atlantic Council 2026 CEO & Senior Management Summit, Washington, D.C., and gave initial observations on the Federal Reserve’s recalibration of the enhanced supplementary leverage ratio, or "eSLR." She said early evidence shows the recalibration has improved Treasury market functioning and strengthened resilience by relaxing regulatory balance sheet constraints on large dealers.

Bowman noted the eSLR had at times been a binding constraint and that the recent changes were intended to better align the rule with its role as a backstop to risk-based capital requirements.

The recalibration the Fed adopted

In November 2025, the Federal Reserve Board, with the FDIC and the OCC, finalized changes to the eSLR. The Board recalibrated the eSLR buffer standard for GSIBs to equal 50 percent of a GSIB's method-1 surcharge under the Board's GSIB surcharge framework, rather than the prior two percent leverage buffer. For GSIB depository institution subsidiaries, the buffer standard is 50 percent of a GSIB's method-1 surcharge, capped at one percent.

The final rule became effective April 1, 2026, with optional early adoption beginning January 1, 2026. Seven of the eight U.S. GSIBs adopted the rule early in the first quarter.

Early results Bowman reported

Bowman described early supervisory data and estimates showing material effects after the recalibration. According to some estimates, the parent bank holding companies of the six dealers gained nearly $5 trillion of additional eSLR headroom in Q1 2026, the first quarter the modified rule was applied. Supervisory data showed dealers' total Treasury positions rose from roughly $600 billion at the beginning of the modification period to over $700 billion at the end of April.

The increase was concentrated among firms that had the lowest eSLR buffers over the prior 24 months. Bowman said a forthcoming Federal Reserve Board staff research note finds dealers' Treasury positions increased notably after the rule was implemented.