The Federal Reserve requested public comment on Tuesday on a rule that would allow district branches to provide financial services to financial market utilities designated as “systemically important” by the Financial Stability Oversight Council.
In July, the FSOC, a panel of regulators comprised of the U.S. Treasury and the Federal Reserve, designated eight FMUs as “systemically important,” including ICE Credit, LLC, the Chicago Mercantile Exchange, Clearing House Payments Co., the Options Clearing Corp., CLS Bank International, the Depository Trust Co., the Fixed Income Clearing Corp. and the National Securities Clearing Corp., Bloomberg reports.
An FSOC designation subjects the FMU to enhanced supervisory and risk management standards required under the Dodd-Frank Act. Dodd-Frank also authorizes the Federal Reserve Board of Governors to “authorize a Federal Reserve Bank to establish and maintain an account for a designated FMU and provide to the designated FMU…wire transfers, settlement, and securities safekeeping, as well as services regarding currency and coin, check clearing and collection and automated clearing house transactions.”
Additionally, under Dodd-Frank, the Federal Reserve Bank can “pay earnings on balances maintained by or on behalf of a designated FMU in the same manner and to the same extent as the Federal Reserve Bank may pay earnings to a depository institution.”