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Board of Governors of the Federal Reserve System
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Federal Reserve Board of Governors

Supervision and Oversight of Financial Market Infrastructures

Supervision and Oversight Expectations

The Board’s supervision and oversight expectations with respect to financial market infrastructures (FMIs) are largely laid out in two documents:

Regulation HH (12 C.F.R. § 234.3): Regulation HH contains risk-management standards for designated financial market utilities (designated FMUs) for which the Board has standard-setting authority pursuant to Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The risk-management standards in Regulation HH are based on and generally consistent with the international risk-management standards in the CPSS-IOSCO Principles for Financial Market Infrastructures Leaving the Board (PFMI). In implementing Regulation HH, the Board uses the PFMI as a reference for its supervisory planning and analysis tools for each designated FMU for which it is the Supervisory Agency (i.e. the Federal agency that has primary jurisdiction over a designated FMU under Federal banking, securities, or commodity futures laws).

Part I, Federal Reserve Policy on Payment System Risk (PSR policy): The PSR policy contains the Board's views and related standards regarding the management of risks in FMIs, including those operated by the Reserve Banks. The risk-management standards for FMIs in part I of the PSR policy reflect the 24 headline standards in the PFMI, and the Board will be guided by the key considerations and the explanatory text of the PFMI, as well as its interpretation of the corresponding provisions of Regulation HH, in its application of the PSR policy to these FMIs. The Board’s transparency expectations in the policy are based, in part, on the CPSS-IOSCO disclosure framework Leaving the Board that complements the PFMI. Designated FMUs for which the Board has standard-setting authority pursuant to Title VIII of the Dodd-Frank Act are required to comply with the equivalent standards in Regulation HH and are not subject to the risk-management and transparency expectations in the PSR policy.

The Board has also incorporated into part I of the PSR policy international guidance on cooperative oversight of FMIs. When establishing cooperative arrangements with other relevant authorities, such as the cooperative oversight arrangement for CLS, the Board will be guided by the CPSS report on Central Bank Oversight of Payment and Settlement Systems Leaving the Board and Responsibility E in the PFMI Leaving the Board, as appropriate.

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Last update: January 29, 2015