(a) This section applies to
any designated financial market utility for which the Board may authorize
a Federal Reserve Bank to open an account or provide services in accordance
with section 806(a) of the Dodd-Frank Act. Upon receipt of Board authorization
and subject to any limitations, restrictions, or other requirements
established by the Board, a Federal Reserve Bank may enter into agreements
governing the details of its accounts and services with a designated
financial market utility, consistent with this section and any other
applicable Board direction. The agreements may include, among other
things, provisions regarding documentation to establish the account
and receive services, conditions imposed on the account and services,
service charges, reporting, accounting for activity in the account,
liability and duty of care, and termination.
(b)
A Federal Reserve Bank should ensure that its establishment and maintenance
of an account for or provision of services to a designated financial
market utility does not create undue credit, settlement, or other
risk to the Reserve Bank. In order to establish and maintain an account
with a Federal Reserve Bank or receive financial services from a Federal
Reserve Bank, the designated financial market utility must be in compliance
with the Supervisory Agency’s regulatory and supervisory requirements
regarding financial resources, liquidity, participant default management,
and other aspects of risk management, as determined by the Supervisory
Agency. In addition, at a minimum, the designated financial market
utility must, in the Federal Reserve Bank’s judgment—
(1) Be in generally sound financial condition,
including maintenance of sufficient working capital and cash flow
to permit the designated financial market utility to continue as a
going concern and to meet its current and projected operating expenses
under a range of scenarios;
(2) Be in compliance with Board orders
and policies, Federal Reserve Bank account agreements and, as applicable,
operating circulars, and other applicable Federal Reserve requirements
regarding the establishment and maintenance of an account at a Federal
Reserve Bank and the receipt of financial services from a Federal
Reserve Bank; and
(3)
Have an ongoing ability, including during periods of market stress
or a participant default, to meet all of its obligations under its
agreement for a Federal Reserve Bank account and services, including
by maintaining—
(i) Sufficient liquid resources to meet
its obligations under the account agreement;
(ii) The operational capacity to ensure
that such liquid resources are available to satisfy the account obligations
on a timely basis in accordance with the account agreement; and
(iii) Sound money settlement
processes designed to adequately monitor its Federal Reserve Bank
account on an intraday basis, process money transfers through its
account in an orderly manner, and complete final money settlement
no later than the value date.
(c) The Board will consult with the Supervisory Agency of a designated
financial market utility prior to authorizing a Federal Reserve Bank
to open an account, and periodically thereafter, to ascertain the
views of the Supervisory Agency regarding the designated financial
market utility’s compliance with the requirements in paragraph (b)
of this section.
(d) In addition to any right
that a Reserve Bank has to limit or terminate an account or the use
of a service pursuant to its account agreement, the Board may direct
the Federal Reserve Bank to impose limits, restrictions, or other
conditions on the availability or use of a Federal Reserve Bank account
or service by a designated financial market utility, including directing
the Reserve Bank to terminate the use of a particular service or to
close the account. If the Reserve Bank determines that a designated
financial market utility no longer complies with one or more of the
minimum conditions in subsection (b), the Reserve Bank will consult
with the Board regarding continued maintenance of the account and
provision of services.
