The Board adopted Regulation HH (12 C.F.R. Part 234) to implement certain statutory provisions of Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Title VIII was enacted to mitigate systemic risk in the financial system and to promote financial stability, in part, through enhanced supervision of financial market utilities (FMUs) designated as systemically important by the Financial Stability Oversight Council. 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. Among other things, Title VIII authorizes the Board to prescribe risk-management standards for designated FMUs for which the Board or another Federal banking agency is the Supervisory Agency (i.e. the Federal agency that has primary jurisdiction over a designated FMU under Federal banking, securities, or commodity futures laws); to receive and review advance notices and notices of emergency change to rules, procedures, or operations (collectively, "notices of material change") from those designated FMUs; to authorize a Federal Reserve Bank to establish and maintain an account for a designated FMU and provide certain services to the designated FMU; and to authorize a Federal Reserve Bank to pay earnings on balances maintained by or on behalf of a designated FMU in the same manner and to the same extent as the Reserve Bank may pay earnings to a depository institution under the Federal Reserve Act.

Regulation HH implements these statutory provisions of Title VIII.

  • Regulation HH § 234.3 prescribes risk-management standards governing the operations related to the payment, clearing, and settlement activities of designated FMUs that are not registered as clearing agencies with the SEC or as derivatives clearing organizations with the CFTC.
  • Regulation HH § 234.4 defines and describes changes to a designated FMU's rules, procedures, or operations that the Board considers to be material and thus subject to its review, and provides procedural requirements, such as the required content of notices and the timing of the review period (see submission instructions).
  • Regulation HH § 234.5 sets out minimum conditions and requirements for a Federal Reserve Bank to establish and maintain an account for, and provide services to, a designated FMU.
  • Regulation HH § 234.6 authorizes a Federal Reserve Bank to pay interest on the balances maintained by a designated FMU in accordance with the statute and other terms and conditions as the Board may prescribe.
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Last Update: May 17, 2024