US issuers push for structured notes TLAC carve-out

Dealers are urging the Federal Reserve not to “throw the baby out with the bathwater” by excluding principal-protected structured notes from TLAC buffers

Fed has ruled structured notes ineligible for TLAC purposes

US banks have stepped up their efforts to persuade the Federal Reserve to soften rules that would bar most of their $73 billion outstanding stock of structured notes from counting towards loss-absorbing capital buffers.

Last October, the Fed issued draft total loss-absorbing capacity (TLAC) requirements for US-domiciled global systemically important banks (G-Sibs), based on rules drawn up by the Financial Stability Board (FSB) that require dealers to hold bail-inable capital and debt equivalent

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