The Federal Reserve Board on Friday invited comment on updates to operational risk-management requirements for certain systemically important financial market utilities (FMUs) supervised by the Board. FMUs provide essential infrastructure to clear and settle payments and other financial transactions upon which the financial markets and the broader economy rely to function effectively. The proposed updates generally provide more specificity to the existing requirements.
The broad operational risk, technology, and regulatory landscape in which FMUs operate has evolved significantly since the Board last updated its risk management requirements for FMUs in 2014. New challenges have emerged, such as the global pandemic and cyber events, while new technological advancements may improve resilience. The proposed changes would promote effective risk management in this rapidly evolving risk environment.
“In light of the rapidly evolving risk landscape, the proposed changes will help ensure that key financial market utilities operate with a high level of resilience and remain a source of strength for the financial system,” said Vice Chair Lael Brainard.
The proposal addresses four key areas: incident management and notification; business continuity management and planning; third-party risk management; and review and testing of operational risk management measures. For example, the proposal would explicitly require FMUs to establish an incident management framework and would emphasize the need for FMUs to continue to advance their cyber resilience capabilities. The proposed updates are largely consistent with existing measures that FMUs take to comply with the current requirements.
Comments on the proposed changes must be submitted within 60 days from the date of publication in the Federal Register.