The IIF reiterate our support for the need for a stable and resilient global financial system, and for the continued evolution of the GSIB assessment methodology. It is important that methodology acknowledges and reflects the very significant progress that has been achieved in the regulatory framework since the 2013 assessment methodology was published, which have materially reduced the cumulative amount of systemic risk in the banking sector. Banks are now much better capitalized and resolvable, riskier businesses and funding sources are less prominent, and bank resolution schemes have progressed substantially.

Our detailed comments focus on key specific items of our concern:

"¢ The proposed removal of the substitutability cap breaches the Committee's 2013 commitment to firstly revise the methodology; this would have a highly idiosyncratic impact on banks that provide services which cannot be readily replaced by smaller banks.

"¢ Including insurance subsidiaries within the scope of the methodology is incongruous with the Basel framework, and creates a potential duplication.

"¢ The definition of cross-jurisdictional activity should acknowledge local transactions undertaken by subsidiaries, asset-liability matching within jurisdictions, and the supervisory changes undertaken in the European Union since the current methodology's publication.

"¢ The introduction of a trading volume indicator is duplicative of existing reforms.

"¢ Inclusion of a new short-term wholesale funding indicator would conflate probability of default (PD) with loss given default (LGD), as well as duplicating existing Basel III standards such as the LCR, NSFR and TLAC.

As well as recognizing other post-crisis reforms that have reduced systemic risk and addressing the framework's highly relative nature, the IIF also proposes that the current review should also address foreign exchange rate volatility.