Dodd-Frank Act - Title VIII: Payment, Clearing, and Settlement Supervision

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.

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