Federal Reserve Reviewing Morgan Stanley's Request for Lower Stress Capital Buffer

The Federal Reserve is still reviewing Morgan Stanley's request for a lower stress capital buffer, despite releasing final capital requirements for large banks effective Oct. 1, 2025. The bank is seeking a downward adjustment in its stress capital buffer.

The Federal Reserve continues to review Morgan Stanley's request for a downward adjustment to its preliminary Stress Capital Buffer (SCB) requirement, despite releasing final capital requirements for large banks effective October 1, 2025. Morgan Stanley remains actively engaged with the Federal Reserve to reach a final SCB requirement before the October 1 deadline [1].

Morgan Stanley, a leading global financial services firm, provides a wide range of investment banking, securities, wealth management, and investment management services. With offices in 42 countries, the firm serves clients worldwide, including corporations, governments, institutions, and individuals [1].

The Federal Reserve's announcement comes after Morgan Stanley asked for reconsideration to reduce its stress capital buffer requirement. The central bank is reviewing this request and plans to make and publish a decision by September 30 [2]. The Federal Reserve's stress-test process assesses how the nation's largest lenders would perform under hypothetical economic conditions and determines updated capital requirements [2].

The stress capital buffer requirement is a component of the total Common Equity Tier 1 capital-ratio requirement, which is the same for each bank and stands at 4.5%. The largest lenders, or global systemically important banks, are also subject to a capital surcharge [2].

The Federal Reserve's announcement follows a proposal to average stress test results over two consecutive years to reduce year-over-year volatility in bank capital requirements. This change is part of the Fed's ongoing efforts to address excessive volatility in stress-test results and corresponding capital requirements [2].

In summary, Morgan Stanley's request for a downward adjustment to its stress capital buffer is still under review by the Federal Reserve, despite the release of final capital requirements for large banks effective October 1, 2025. The Federal Reserve's decision on Morgan Stanley's request is expected by September 30.

References:
[1] https://www.theglobeandmail.com/investing/markets/markets-news/Business%20Wire/34490162/morgan-stanley-statement-on-stress-capital-buffer/
[2] https://www.bloomberg.com/news/articles/2025-08-29/morgan-stanley-asks-federal-reserve-to-cut-capital-requirement
[3] https://www.stocktitan.net/news/MS/morgan-stanley-statement-on-stress-capital-lnjmb9x09isd.html
[4] https://seekingalpha.com/news/4490581-fed-declares-individual-capital-requirements-for-large-banks-db-usa-tops-list