Supervision and Oversight of Financial Market Infrastructures
The Federal Reserve supervises or oversees a number of private-sector systems under several authorities and in several contexts. In particular, the Board has extensive responsibility with respect to designated financial market utilities, which include systemically important private-sector payment systems, securities settlement systems, central securities depositories, and central counterparties. In cases where the Board does not have exclusive authority, the Federal Reserve works cooperatively with other U.S. and foreign financial regulators to promote strong risk management and transparency by these systems. In its supervision or oversight of private-sector FMIs, the Board applies the supervision and oversight expectations in Regulation HH or in the Federal Reserve Policy on Payment System Risk, as applicable.
The Board also participates in the cooperative oversight of SWIFT (Society for Worldwide Interbank Financial Telecommunication), which is a member-owned cooperative headquartered in Belgium that operates a messaging service for financial messages, such as payments and securities transactions, between member banks worldwide. Although SWIFT is neither a payment system nor a settlement system, a large number of financial institutions depend on SWIFT for their daily messaging. Under a cooperative oversight arrangement with the central banks of the Group of Ten countries (G-10), the National Bank of Belgium (NBB) is the lead overseer of SWIFT. As lead overseer, the NBB conducts the oversight of SWIFT in cooperation with the other central banks, including the Federal Reserve. In 2012, this framework was reviewed and a SWIFT Oversight Forum was established, through which information sharing on SWIFT oversight activities was expanded to a larger group of central banks. The issues discussed can include all topics related to systemic risk, confidentiality, integrity, availability, and company strategy.