§5461 — Title 12 Banks and Banking | U.S. Code

Summary

Gives the Board of Governors power to set and supervise uniform safety rules for big financial market utilities and for important payment, clearing, and settlement work done by banks and other firms. The law says markets need safe, efficient ways to clear trades, and that these utilities and activities can both cut risks and create new, concentrated risks that could hurt the whole financial system. The goal is to lower system-wide risk and keep the financial system stable by improving risk management, strengthening liquidity at key utilities, and giving the Board a bigger role in supervising these standards.

Title 12, §5461

Banks and Banking — Source: USLM XML via OLRC

(a)Congress finds the following:

(1)The proper functioning of the financial markets is dependent upon safe and efficient arrangements for the clearing and settlement of payment, securities, and other financial transactions.

(2)Financial market utilities that conduct or support multilateral payment, clearing, or settlement activities may reduce risks for their participants and the broader financial system, but such utilities may also concentrate and create new risks and thus must be well designed and operated in a safe and sound manner.

(3)Payment, clearing, and settlement activities conducted by financial institutions also present important risks to the participating financial institutions and to the financial system.

(4)Enhancements to the regulation and supervision of systemically important financial market utilities and the conduct of systemically important payment, clearing, and settlement activities by financial institutions are necessary—

(A)to provide consistency;

(B)to promote robust risk management and safety and soundness;

(C)to reduce systemic risks; and

(D)to support the stability of the broader financial system.

(b)The purpose of this subchapter is to mitigate systemic risk in the financial system and promote financial stability by—

(1)authorizing the Board of Governors to promote uniform standards for the—

(A)management of risks by systemically important financial market utilities; and

(B)conduct of systemically important payment, clearing, and settlement activities by financial institutions;

(2)providing the Board of Governors an enhanced role in the supervision of risk management standards for systemically important financial market utilities;

(3)strengthening the liquidity of systemically important financial market utilities; and

(4)providing the Board of Governors an enhanced role in the supervision of risk management standards for systemically important payment, clearing, and settlement activities by financial institutions.

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 111–203, title VIII, § 814,

July 21, 2010, 124 Stat. 1822, provided that: “This title [enacting this subchapter] is effective as of the date of enactment of this Act [

July 21, 2010].”

Short Title

This subchapter known as the “Payment, Clearing, and Settlement Supervision Act of 2010”, see

Short Title

note set out under section 5301 of this title.

§5461 Findings and Purposes

Summary

Title 12, §5461

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

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Citations & Metadata