Statement Before the Financial Stability Oversight Council
Chairman Gary Gensler
March 17, 2011
I support the notice of proposed rulemaking on the Authority to Designate Financial Market Utilities as Systemically Important. It is an important step in fulfilling the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act to ensure that there is robust oversight and risk management of financial market utilities, including clearinghouses.
Comprehensive and robust regulatory oversight of clearinghouses is essential to our country’s financial stability. This is particularly important since, under the Dodd-Frank Act, standardized swaps between financial entities must be brought to clearinghouses.
The Commodity Futures Trading Commission (CFTC) has overseen clearinghouses for decades. The Dodd-Frank Act provides for enhanced oversight of these clearinghouses. In close consultation with our fellow domestic and international regulators, and particularly with the Federal Reserve and the Securities and Exchange Commission, the CFTC proposed rulemakings on risk management for clearinghouses. These rulemakings take account of relevant international standards, particularly those developed by the Committee on Payment and Settlement Systems and the International Organization of Securities Commissions (CPSS-IOSCO).
The Dodd-Frank Act gives the Financial Stability Oversight Council and the Federal Reserve Board important roles in clearinghouse oversight by authorizing the Council to designate certain clearinghouses as systemically important and by permitting the Federal Reserve to recommend heightened prudential standards in certain circumstances.
The notice of proposed rulemaking complements the CFTC’s rulemaking efforts. Public input will be valuable in determining how the Council should apply statutory criteria to determine which clearinghouses qualify for designation as systemically important.
Last Updated: March 17, 2011