The Federal Reserve today issued a final rule updating operational risk management requirements for certain systemically important financial market utilities it supervises. FMUs are entities that provide essential infrastructure to clear and settle payments and other financial transactions. Currently, there are eight FMUs that have been designated as systemically important by the Financial Stability Oversight Council—two of which are supervised by the Fed.
The final rule—which is largely consistent with the proposal—is intended to address changes to the operational risk, technology and landscape in which FMUs operate that have taken place since the requirements were last updated in 2014.
Among other things, the final rule establishes incident management and notification for designated FMUs; amends current requirements on business continuity planning under Regulation HH; updates requirements under Reg HH related to third-party risk management; and creates new requirements for review and testing to provide more specificity about operational risk.
