Eight firms tagged as systemically critical

July 19, 2012 at 3:26 PM
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WASHINGTON, July 19 (UPI) -- The Financial Stability Oversight Council in Washington has named eight firms as systemically important to the U.S. financial system -- a first for the group.

The Council was formed in accordance with a mandate in the Dodd-Frank Wall Street Reform and Consumer Protection Act, which turns two years old on Saturday.

Comprised of representatives from every major federal financial regulator, plus a few independent members, the Council was designed to keep an eye on firms that were systemically important to the U.S. financial system due to their size or interactions with other financial firms or government institutions.

The first eight firms designated Wednesday were specifically noted as playing critical roles as part of the financial system's infrastructure -- financial market utilities -- rather than firms so large they cast a threatening shadow over the country's financial health.

The Council's first eight firms named are the Clearing House Payments Company, CLS Bank International, Chicago Mercantile Exchange, Inc., the Depository Trust Company, Fixed Income Clearing Corporation, ICE Clear Credit LLC, National Securities Clearing Corp., and the Options Clearing Corp.

The Council also said in a statement that none of the eight had elected to complain about their new regulatory status.

Each of the so-called financial market utilities or FMU firms were notified of the designation and given 30 days to request a hearing on the matter. "But no FMU requested such a hearing," the Treasury Department's Office of Public Affairs said in a statement.

"The authority to designate FMUs -- often referred to as the "plumbing of the financial system" for their role in clearing and settling transactions between financial institutions -- is an important component of Wall Street Reform and is one of a number of tools now available to constrain risk and help protect against future financial crises," the statement said.

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