Board of Governors of the Federal Reserve System

The Federal Reserve Board on Friday approved changes to its Policy on Payments System Risk that revise the Board's expectations for systemically important payments and settlement systems subject to its authority and update and clarify the policy with regard to central counterparties.

Under the revised policy, systemically important payments and settlement systems subject to the Board's authority are expected to complete and disclose publicly self-assessments against the principles and minimum standards in the policy. The self-assessment should be reviewed and approved by the system's senior management and board of directors upon completion and made readily available to the public. In addition, a self-assessment should be updated following material changes to the system or its environment and, at a minimum, reviewed by the system every two years.

The Board expects each systemically important system subject to its authority to complete and publish its initial self-assessment by December 31, 2007. The Board will communicate directly with each system expected to complete a self-assessment.

The revisions also incorporate the Recommendations for Central Counterparties developed by the Committee on Payment and Settlement Systems of the central banks of the Group of Ten countries and the Technical Committee of the International Organization of Securities Commissions. These recommendations will serve as the Board's minimum standards for central counterparties identified as systemically important and subject to the Board's authority. This change is consistent with past revisions that updated the policy in light of new international risk management standards for payments and securities settlement systems.

The Board's notice is attached.