Bernanke Addresses Supervision of Financial Market Utilities

By J. Preston Carter, J.D., LL.M., Editor, Financial Privacy Law Guide, CCH Federal Banking Law Reporter, State Banking Law Reporter and Bank Digest; co-author, Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis, April 5, 2011.

Fed Chairman Ben S. Bernanke addressed the operation and financial soundness of clearinghouses for payments, securities and derivatives transactions in remarks at the 2011 Financial Markets Conference in Stone Mountain, Ga., on April 4, 2011. Bernanke noted that Title 8 of the Dodd-Frank Act contains provisions aimed at improving the transparency, resilience and financial strength of clearinghouses, which it calls financial market utilities. He said the Fed is “working hard to implement the new statutory provisions of title 8. We are actively collaborating with the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) on the setting of regulatory standards and plans for the supervision of financial market utilities.”

In the longer term, Bernanke continued, the Fed is also working with securities regulators and central banks from more than 20 other countries to revise and strengthen the existing international standards for the major types of financial market utilities. Bernanke noted that the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions published new international standards for public consultation in March. He said, “We hope that the regulatory agencies in the United States, and those in other major countries, can adopt a single set of enhanced risk-management standards that will apply to all systemically important financial market utilities globally.”