US Financial Market Utilities (FMUs): Federal Reserve Board Updates Risk Management Rules
The operational risk requirements rules have been amended for Financial Markets Utilities (FMUs) designated as systemically important by the Financial Stability Oversight Council (FSOC) under the Dodd-Frank Act. These changes are reflected in Regulation HH and account for the evolving operational risk, technology, and regulatory landscape within which designated FMUs operate. The amended rules apply only to FMUs supervised by the Board (currently 2).
FMUs are persons that manages or operates a multilateral system for the purpose of transferring, clearing, or settling payments, securities or other financial transactions among financial institutions or between financial institutions and the person.
An FMU is required to have a robust risk-management framework, including appropriate policies and procedures to measure, monitor, and manage the range of risks that arise in or are borne by the FMU. Operational risk can be described as the risk that deficiencies in information systems, internal processes, and personnel or disruptions from external events will result in the deterioration or breakdown of the services provided by an FMU.
The proposed amendments focuses on:
Review and testing,
incident management and notification,
business continuity management and planning, and
third-party risk management.
The amended rules will be effective 30 days after publication in the federal register.
See the press release here.
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