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Federal Reserve Board of Governors

Designated Financial Market Utilities

About

Financial market utilities (FMUs) are multilateral systems that provide the infrastructure for transferring, clearing, and settling payments, securities, and other financial transactions among financial institutions or between financial institutions and the system. In cases where, among other things, a failure or a disruption to the functioning of an FMU could create, or increase, the risk of significant liquidity or credit problems spreading among financial institutions or markets and thereby threaten the stability of the U.S. financial system, the FMU may be designated as systemically important by the Financial Stability Oversight Council (Council) under Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). To date, the Council has designated the following FMUs as systemically important. The Supervisory Agency (i.e. the Federal agency that has primary jurisdiction over a designated FMU under Federal banking, securities, or commodity futures laws) is indicated in parentheses:

  • The Clearing House Payments Company, L.L.C., on the basis of its role as operator of the Clearing House Interbank Payments System - (Board);
  • CLS Bank International - (Board);
  • Chicago Mercantile Exchange, Inc. - (Commodity Futures Trading Commission (CFTC));
  • The Depository Trust Company - (Securities and Exchange Commission (SEC));
  • Fixed Income Clearing Corporation - (SEC);
  • ICE Clear Credit L.L.C. - (CFTC);
  • National Securities Clearing Corporation - (SEC); and
  • The Options Clearing Corporation - (SEC).

For more information regarding the Councilís designations, see the Councilís final rule on the FMU designation process and press release on the designation of the eight FMUs.

The Clearing House Interbank Payments System Leaving the Board
The Clearing House Interbank Payments System (CHIPS), operated by The Clearing House Payments Company, LLC, is a real-time, multilateral payment system typically used for large dollar payments. The Board is the Supervisory Agency for CHIPS under Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. CHIPS is required to comply with the requirements set out in Regulation HH.

In addition to supervision and examination under Title VIII of the Dodd-Frank Act, CHIPS is also subject to supervision and examination by other Federal bank supervisory agencies, under the auspices of the Federal Financial Institutions Examination Council (FFIEC), as well as by the New York State Department of Financial Services. FFIEC examinations, which include participation by the Board as a bank supervisory agency, focus on information-technology operations in accordance with guidelines and procedures established by the FFIEC. The Board is the lead agency with respect to FFIEC examinations of CHIPS.

CLS Bank International Leaving the Board
CLS Bank International (CLS) is a special purpose bank that settles simultaneously both payment obligations ("legs") that arise from a single foreign exchange (FX) transaction. The CLS payment-versus-payment (PVP) settlement model ensures that one payment leg of a FX transaction is settled if and only if the corresponding payment leg is also settled, eliminating the FX settlement risk that arises when each leg of a FX transaction is settled separately. CLS also settles the bilateral net payment obligations arising in multiple currencies from OTC credit derivatives contracts housed in Depository Trust and Clearing Corporation's Trade Information Warehouse. CLS is chartered by the Board as an Edge corporation under Section 25A of the Federal Reserve Act, as amended.

The Board is the Supervisory Agency for CLS under Title VIII of the Dodd-Frank Act. CLS is required to comply with the requirements set out in Regulation HH. Additionally, as an Edge corporation, CLS Bank is supervised and regulated as a bank by the Federal Reserve.

In addition to and separate from its Dodd-Frank Act and Edge Act responsibilities, the Federal Reserve also is the lead overseer of CLS in a cooperative oversight arrangement with the central banks whose currencies are settled by CLS. This cooperative oversight arrangement is governed by a protocol between the participating central banks. See the Protocol for the Cooperative Oversight Arrangement of CLS.

Chicago Mercantile Exchange, Inc. Leaving the Board
Chicago Mercantile Exchange, Inc. (CME), through its U.S. clearing division (CME Clearing), provides central counterparty clearing services for futures, options, and swaps contracts. CME Clearing is a derivatives clearing organization registered with the CFTC and a clearing agency registered with the SEC. The CFTC is the Supervisory Agency for CME under Title VIII of the Dodd-Frank Act. Under powers granted by Title VIII, the Federal Reserve has certain authorities with respect to the supervision of CME. In this role, the Federal Reserve is guided by part I of the Federal Reserve Policy on Payment System Risk (PSR policy).

The Depository Trust Company Leaving the Board
The Depository Trust Company (DTC), a subsidiary of The Depository Trust & Clearing Corporation (DTCC), is a central securities depository and securities settlement system for eligible securities including equities, corporate bonds, and municipal bonds, as well as money market instruments such as commercial paper. DTC is chartered as a limited-purpose trust company under New York State banking law, is a member of the Federal Reserve System, and is a clearing agency registered with the SEC.

The SEC has primary jurisdiction over DTC as its Supervisory Agency under Title VIII of the Dodd-Frank Act. The New York State Department of Financial Services (NYSDFS) supervises DTC as a New York State-chartered trust company. The Federal Reserve supervises DTC as a state member bank of the Federal Reserve System under the Federal Reserve Act. In its supervision, the Federal Reserve is guided by part I of its PSR policy. The Federal Reserve consults with the SEC and the NYSDFS when carrying out its supervision of DTC.

Fixed Income Clearing Corporation Leaving the Board
The Fixed Income Clearing Corporation (FICC), a subsidiary of DTCC, is composed of the Government Securities Division (GSD) and the Mortgage-Backed Securities Division (MBSD). GSD is a central counterparty for U.S. Treasury and agency debt securities. MBSD is a central counterparty for U.S. Agency pass-through mortgage-backed securities. FICC is a clearing agency registered with the SEC. The SEC is the Supervisory Agency for FICC under Title VIII of the Dodd-Frank Act. Under powers granted by Title VIII, the Federal Reserve has certain authorities with respect to the supervision of FICC. In this role, the Federal Reserve is guided by part I of its PSR policy.

ICE Clear Credit L.L.C. Leaving the Board
ICE Clear Credit L.L.C. (ICC) provides central counterparty clearing services for standardized credit-default swap (CDS) contracts. ICC clears CDS on indices, single-name corporates, and single-name sovereigns. ICC is a derivatives clearing organization registered with the CFTC and a securities clearing agency registered with the SEC. The CFTC is the Supervisory Agency for ICC under Title VIII of the Dodd-Frank Act. Under powers granted by Title VIII, the Federal Reserve has certain authorities with respect to the supervision of ICC. In this role, the Federal Reserve is guided by part I of its PSR policy.

National Securities Clearing Corporation Leaving the Board
The National Securities Clearing Corporation (NSCC), a subsidiary of DTCC, is a central counterparty that provides clearing and settlement services for U.S. equities, corporate and municipal bonds, exchange-traded funds, and unit investment trusts. NSCC is a clearing agency registered with the SEC. The SEC is the Supervisory Agency for NSCC under Title VIII of the Dodd-Frank Act. Under powers granted by Title VIII, the Federal Reserve has certain authorities with respect to the supervision of NSCC. In this role, the Federal Reserve is guided by part I of its PSR policy.

The Options Clearing Corporation Leaving the Board
The Options Clearing Corp (OCC) provides central counterparty clearing services for U.S. options, futures, and options on futures contracts. OCC is a clearing agency registered with the SEC and a derivatives clearing organization registered with the CFTC. The SEC is the Supervisory Agency for OCC under Title VIII of the Dodd-Frank Act. Under powers granted by Title VIII, the Federal Reserve has certain authorities with respect to the supervision of OCC. In this role, the Federal Reserve is guided by part I of its PSR policy.

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Last update: January 29, 2015