Operational: Payments, Clearing, and Settlement
OPS PCS 1. FMU Contingency Arrangements
Q1. Would the Agencies prefer that firms limit FMU contingency arrangements to only the three examples provided in the Guidance (i.e., pre-positioning of additional liquidity at FMUs, limiting intraday credit provisions to clients, and requiring clients to pre-fund settlement activity), or may firms propose additional or alternative arrangements?
A1. The 2018 Guidance indicates that contingency arrangements should "not be limited to" the examples noted and firms may propose additional solutions.
Q2. Please clarify the Agencies' expectations regarding providing clients with transparency into contingency arrangements.
A2. The 2018 Guidance indicates that firms should provide clients with transparency into potential impacts from implementation of contingency arrangements and consider whether additional actions are appropriate. Where applicable, firms should, on an ex-ante basis (i.e., prior to any stress period), inform wholesale clients of contingency arrangements, such as limiting intraday credit provisions and requiring prefunding of settlement activity, so that the firm and its clients may better understand the potential operational and financial impacts from implementation of such arrangements.
Q3. Please clarify the Agencies' expectations regarding loss of FMU access scenarios.
A3. The 2018 Guidance is additive to previous guidance. Footnote 3 of the 2018 Guidance indicates that the "2013 Guidance, the 2014 Letter, and the 2015 Communication, as described in the letters to the firms, continue to be applicable […], except to the extent superseded or supplemented by the provisions of this document." Firms are not expected to incorporate loss of FMU access scenarios into their U.S. resolution strategy. Firms should continue to provide analysis regarding the impact associated with the loss of FMU access, but this does not need to be incorporated into the RLEN/RCEN estimates.