United States: Financial Sector Assessment Program-Technical Note-Supervision of Financial Market Infrastructures, Resilience of Central Counterparties and Innovative Technologies
IMF Staff Country Reports, August 10, 2020
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- United States: Financial Sector Assessment Program-Technical Note-Supervision of Financial Market Infrastructures, Resilience of Central Counterparties and Innovative Technologies
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Bibliographic details
- Published: August 10, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513552941.002
Summary findings
- The United States financial system includes several systemically important financial market infrastructures (FMIs) that are regulated, supervised, and overseen by multiple authorities.
- U.S. FMIs are crucial to U.S. dollar clearing: Fedwire Funds Service and The Clearing House Interbank Payments System (CHIPS).
- U.S. FMIs are crucial to the clearing and settlement of U.S. Treasuries: Fedwire Securities Service and the Fixed Income Clearing Corporation (FICC).
- Central counterparties (CCPs) that clear exchange-traded or over-the-counter (OTC) corporate securities or derivatives are of key importance to the safe and efficient functioning of these (global) markets.
- Disruption of critical operations at one of the large U.S. FMIs may spread to its participants, other FMIs, markets, and throughout the U.S. and global financial systems.
- The Financial Stability Oversight Council (FSOC) designated eight financial market utilities (FMUs) to be systemically important.
- These designated FMUs are regulated, supervised and overseen by the Federal Reserve Board (FRB), the Securities and Exchange Commission (SEC), or the Commodity Futures Trading Commission (CFTC), depending on their activities.
- The Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA) authorized the FRB to promote uniform standards for the management of risks by systemically important FMUs.
Risk channels and systemic considerations
- Operational disruption at a large U.S. FMI can propagate to:
- FMI participants
- Other FMIs
- Markets
- The U.S. and global financial systems
- CCPs for exchange-traded and OTC corporate securities and derivatives are critical nodes for market functioning and pose potential channels for contagion if resilience is insufficient.
Regulatory and supervisory framework
- Multiple authorities share regulation, supervision, and oversight responsibilities for FMIs:
- Federal Reserve Board (FRB)
- Securities and Exchange Commission (SEC)
- Commodity Futures Trading Commission (CFTC)
- FSOC has designated eight FMUs as systemically important, triggering enhanced supervisory attention.
- DFA provides statutory authority for the FRB to promote uniform risk management standards for systemically important FMUs.
Thematic scope and technical focus areas
- Subject areas covered:
- Banking
- Central counterparty clearing house
- Financial markets
- Financial regulation and supervision
- Financial sector policy and analysis
- Payment systems
- PFM information systems
- Principles for Financial Market Infrastructures
- Public financial management (PFM)
- Stress testing
- Keywords and technical terms featured:
- automated clearing house, bridge CCP, Central counterparty clearing house, clearing bank, CR, default fund, derivatives CCP, Global, ISCR, liquidity needs, loss waterfall, market participant, OTC derivatives CCP, Payment systems, PFM information systems, Principles for Financial Market Infrastructures, recovery plan, resolution planning, securities CCP, stock option, Stress testing
Publication and document metadata (key statistics)
- Publication date: August 10, 2020
- Pages: 55
- Volume: 2020
- Issue: 249
- Series: Country Report No. 2020/249
- DOI: https://doi.org/10.5089/9781513552941.002
- Stock No: 1USAEA2020009
- ISBN: 9781513552941
- ISSN: 1934-7685
International Monetary Fund. Monetary and Capital Markets Department "United States: Financial Sector Assessment Program-Technical Note-Supervision of Financial Market Infrastructures, Resilience of Central Counterparties and Innovative Technologies", IMF Staff Country Reports 2020, 249 (2020).
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- EXECUTIVE SUMMARY — Content unit 1usaea2020009