Why It Matters. Advancements in technology allow financial services companies to offer better and faster services to their clients, but they also increase the potential for operational risk incidents, such as cyber attacks. Protecting against these risks is extremely important for our largest financial market utilities (FMUs) that facilitate trillions of dollars of consumer and business payments and other financial transactions each day. Considering their systemic importance, serious operational risk incidents could threaten to temporarily shut down financial and economic activity.
What We Said. The Federal Reserve’s regulation outlining risk management expectations for FMUs has not been updated since 2014. Meanwhile, there have been many technological, market, and regulatory changes since then that would affect the management of operational risks at systemically important FMUs. Therefore, changes to the rules for systemically important FMUs are necessary and overdue, and Better Markets fully supports the updates that are outlined in the Proposal.
Bottom Line. We support the efforts of the Federal Reserve to improve the operational risk resilience of systemically important FMUs and look forward to the final rule being implemented largely as in the Proposal.