Federal Reserve tightens risk management rules
30 October 2014 Washington DC
Image: Shutterstock
The US Federal Reserve has issued a ruling that amends risk-management regulations for financial market utilities, particularly those deemed ‘systematically important’ by the Financial Stability Oversight Council.
The new rules will also apply to utilities that have a certain level of standard-setting authority under the Dodd-Frank Wall Street reform and the Consumer Protection Act.
Key amendments to the existing regulations will include adding separate standards to address credit and liquidity risk, new standards on general business risk, and new standards for tiered participation arrangements.
More stringent requirements on transparency and disclosure are also likely to come in to effect, as well as additional requirements on recovery and orderly wind-down planning.
The changes are largely based on the international risk management standards laid out in the Principles for Financial Market Infrastructures of 2012, which was developed by the Federal Reserve’s Payment and Settlement Systems committee and the International Organisation of Securities Commission.
The amended policy will come in to effect on 31 December, while additional compliance rules will come in to effect for other institutions in 2015.
The new rules will also apply to utilities that have a certain level of standard-setting authority under the Dodd-Frank Wall Street reform and the Consumer Protection Act.
Key amendments to the existing regulations will include adding separate standards to address credit and liquidity risk, new standards on general business risk, and new standards for tiered participation arrangements.
More stringent requirements on transparency and disclosure are also likely to come in to effect, as well as additional requirements on recovery and orderly wind-down planning.
The changes are largely based on the international risk management standards laid out in the Principles for Financial Market Infrastructures of 2012, which was developed by the Federal Reserve’s Payment and Settlement Systems committee and the International Organisation of Securities Commission.
The amended policy will come in to effect on 31 December, while additional compliance rules will come in to effect for other institutions in 2015.
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