This title is also known as ‘‘Payment, Clearing, and Settlement Supervision Act of 2010’’.
The purpose of this title is to mitigate systemic risk in the financial system and promote financial stability by:
- authorizing the Board of Governors to promote uniform standards for :
- management of risks by systemically important financial market utilities; and
- conduct of systemically important payment, clearing, and settlement activities by financial institutions;
- providing the Board of Governors an enhanced role in the supervision of risk management standards for systemically important financial market utilities;
- strengthening the liquidity of systemically important financial market utilities
- providing the Board of Governors an enhanced role in the supervision of risk management standards for systemically important payment, clearing, and settlement activities by financial institutions.
The Supervisory Agency will conduct examinations of a designated financial market utility at least once annually in order to determine the following:
- The nature of the operations of, and the risks borne by, the designated financial market utility.
- The financial and operational risks presented by the designated financial market utility to financial institutions, critical markets, or the broader financial system.
- The resources and capabilities of the designated financial market utility to monitor and control such risks.
- The safety and soundness of the designated financial market utility.
- The designated financial market utility’s compliance with the title
Examination of and enforcement actions against financial institutions subject to standards for designated activities
The appropriate financial regulator is authorized to examine a financial institution subject to the standards to determine the following:
- The nature and scope of the designated activities engaged in by the financial institution.
- The financial and operational risks the designated activities engaged in by the financial institution may pose to the safety and soundness of the financial institution.
- The financial and operational risks the designated activities engaged in by the financial institution may pose to other financial institutions, critical markets, or the broader financial system.
- The resources available to and the capabilities of the financial institution to monitor and control the risks
- The financial institution’s compliance with this title
The Board of Governors is entrusted with the examination of financial institutions and reporting if there is cause for systemic risk.
Common framework for designated clearing entity risk management
The Commodity Futures Trading Commission and the Commission will coordinate with the Board of Governors to jointly develop risk management supervision programs for designated clearing entities not later than 1 year after the date of enactment of this Act.
The Commodity Futures Trading Commission, the Commission, and the Board of Governors will submit a joint report to the Committee on Banking, Housing, and Urban Affairs and the Committee on Agriculture, Nutrition, and Forestry of the Senate, and the Committee on Financial Services and the Committee on Agriculture of the House of Representatives recommendations for:
- improving consistency in the designated clearing entity oversight programs of the Commission and the Commodity Futures Trading Commission
- promoting robust risk management by designated clearing entities
- encouraging robust risk management oversight by regulators of designated clearing entities
