§5466 Examination of and Enforcement Actions Against Designated Financial Market Utilities

Summary

Supervisory agencies must examine each designated financial market utility at least once a year. Examinations look at what the utility does, the risks it faces and the risks it poses to banks, key markets, or the whole financial system, whether the utility has the tools and staff to manage those risks, its overall safety, and whether it follows the law and the rules made under the law. If an outside firm provides an important service for the utility, supervisors can inspect that service the same as if the utility did the work itself. For enforcement, the supervisory agency and the Board of Governors can use the powers listed in section 1818(b)–(n) as if the utility were a bank and the agency were the bank regulator. The supervisory agency must consult with the Board each year about how exams will be done and must lead the exams. The Board may join exams. The Board can recommend enforcement to stop big risks. The supervisory agency must respond within 60 days. If the agency rejects the Board’s recommendation, the Board can send it to the Council for a binding decision, and a majority of the Council can make the agency take enforcement action. In emergencies where an imminent risk exists and normal steps won’t work, the Board — after consulting the supervisory agency and with a majority Council vote — may act using the same section 1818(b)–(n) powers.