On October 28, 2014, the U.S. Federal Reserve Board issued a final rule amending the Regulation HH risk-management standards for systematically important designated financial market utilities (“FMUs”). The Federal Reserve Board is introducing a common set of risk management standards for all types of designated FMUs to replace the sets of risk management standards for payment systems and for central securities depositories (“CSDs”). The common set of risk management standards and definitions are based on the Principles for Financial Market Infrastructures (“PFMI”) which was published in April 2012 by the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions. The final rule is effective December 31, 2014.

The Federal Reserve Board has also adopted revisions to part I of its Federal Reserve Policy on Payment System Risk to conform to international standards described in the PFMI. Significant amendments to the rule and modifications to the policy include establishing separate standards to address credit risk and liquidity risk, new requirements on recovery and orderly wind-down planning, a new standard on general business risk, a new standard on tiered participation arrangements, and heightened requirements on transparency and disclosure.

The final rule for amendments to Regulation HH is available at: http://www.federalreserve.gov/newsevents/press/other/other20141028a1.pdf

The revisions to the Federal Reserve Policy on Payment System Risk are available at: http://www.federalreserve.gov/newsevents/press/other/other20141028a2.pdf.