Release Date: June 22, 2006
For immediate release
The Federal Reserve Board on Thursday requested comment on proposed revisions to Part I of its Policy on Payments System Risk (PSR policy), which addresses risk management in payments and settlement systems.
The proposed revisions update and revise the policy in several ways. First, the Board is proposing to incorporate into its PSR policy the international risk management standards for central counterparties recently developed by the Committee on Payment and Settlement Systems (CPSS) of the central banks of the Group of Ten countries and the Technical Committee of the International Organization of Securities Commissions (IOSCO). These standards, published by the Bank for International Settlements in a report titled Recommendations for Central Counterparties (Recommendations for CCP), will serve as the Board's minimum standards for central counterparties identified as systemically important and subject to the Board's authority. This proposed change is consistent with past revisions that incorporated into the PSR policy the Core Principles for Systemically Important Payment Systems (Core Principles) and Recommendations for Securities Settlement Systems (Recommendations for SSS), developed by the CPSS and CPSS-IOSCO, respectively.
In support of incorporating the Recommendations for CCP, the Board is proposing revisions to the scope of Part I of the PSR policy with regard to central counterparties. As revised, a central counterparty would be included as one of several types of systems that fall under the term "settlement system" as defined in the revised policy. The Board is also proposing revisions to the purposes of Part I of the policy to clarify its views on risk management for payments and settlement systems generally and its expectations for systems subject to its authority.
Finally, the Board is proposing revisions that would establish an expectation that systemically important systems disclose publicly self-assessments against the principles or minimum standards incorporated in the PSR policy. Specifically, systemically important systems subject to the Board's authority will be expected to complete and disclose publicly self-assessments against the Core Principles, Recommendations for SSS, or Recommendations for CCP, as appropriate, and demonstrate the extent to which the system meets the principles or minimum standards. The Board is proposing several guidelines to assist a system operator in developing a self-assessment consistent with the Board's expectations.
The Board is also making other technical changes to its PSR policy.
Comments are requested by September 22, 2006.
The Board's notice is attached.