The Financial Stability Oversight Council voted
unanimously to designate eight financial market utilities as systemically
important under Title VIII of the Dodd-Frank Act .This action, the first
designations made by the Council, represents another key step towards creating
a safer and more resilient financial system. The authority to designate financial
market utilities is an important component of the Dodd-Frank Act and is one of a number of
tools now available to constrain risk and help protect against future financial
crises.
The designated financial market utilities are: The
Clearing House Payments Company, L.L.C., on the basis of its role as operator
of the Clearing House Interbank Payments System; CLS Bank International; Chicago
Mercantile Exchange, Inc.; Depository Trust Company; Fixed Income Clearing
Corporation; ICE Clear Credit LLC; National Securities Clearing Corporation;
and the Options Clearing Corporation
The Dodd-Frank Act provides four specific factors the
Council must consider when determining whether a financial market utility is,
or is likely to become, systemically important. The Council’s regulations
regarding the designation of financial market utilities provide more detail
regarding these factors and their role in the Council’s analysis of whether to
designate a financial market utility as systemically important.
The four factors are the aggregate monetary value of
transactions processed by the financial market utility and the aggregate
exposure to its counterparties, as well as the relationship, interdependencies,
or other interactions of the financial market utility with other such utilities
or payment, clearing, or settlement activities; and the effect that the failure
of or a disruption to the financial market utility would have on critical
markets, financial institutions, or the broader financial system.
The vote followed a process laid out in the Council’s
regulations. Each financial market utility received a letter on May 22,
2012, informing it that the Council had proposed its designation and providing
it with the rationale for the Council’s determination. The financial
market utilities each had 30 days to request a hearing if they disagreed with
the proposed determination of the Council or the Council’s proposed findings of
fact, but no entity requested such a hearing.
The Council also continues to make progress on its
first designations of nonbank financial companies for supervision by the
Federal Reserve Board.