ASA Statement on Treasury Market Fragilities and Preventative Solutions

WASHINGTON – Ahead of a House Financial Services Committee hearing examining Treasury market fragilities and preventative solutions, the American Securities Association (ASA) today called on policymakers to reform the supplementary leverage ratio (SLR) because it needlessly constrains primary dealer bank intermediation in the U.S. Treasury market.

“The experience of March 2020 and April 2025 is evidence that the SLR regulation prevents banks from providing liquidity in the U.S. Treasury market during periods of market stress,” said ASA President and CEO Chris Iacovella. “The stability of the U.S. Treasury market is a symbol of American strength that must not be interfered with by a cabal of central bankers in Basel, Switzerland. Common sense demands the SLR either be repealed in its entirety or that Treasury securities and other cash equivalent reserves are not used in the rule’s calculation. Unless these changes are made, the U.S. Treasury market will continue to experience unnecessarily wild swings in times of market stress.” 

The SLR is a non-risk-sensitive capital requirement that treats all assets equally, regardless of risk, such that even holdings of US Treasuries consume balance sheet capacity. When the U.S. Treasury market experiences investors rushing to sell assets for cash, this causes a surge in bank deposits and an expansion of bank balance sheets. When this happens, banks subject to the SLR cannot intermediate trades or provide liquidity in the Treasury market, and this needlessly exacerbates market volatility.

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The American Securities Association (ASA) represents the retail and institutional capital markets interests of regional financial services firms who provide Main Street businesses with access to capital and advise hardworking Americans how to create and preserve wealth. ASA’s mission is to promote trust and confidence among investors, facilitate capital formation, and support efficient and competitively balanced capital markets. This mission advances financial independence, stimulates job creation, and increases prosperity. The ASA has a geographically diverse membership of almost one hundred members that spans the Heartland, Southwest, Southeast, Atlantic, and Pacific Northwest regions of the United States.