12 U.S.C. § 5466 | Examination of and enforcement actions against designated financial market utilities

(a)

Examination

Notwithstanding any other provision of law and subject to subsection (d), the Supervisory Agency shall conduct examinations of a designated financial market utility at least once annually in order to determine the following:

(1)

The nature of the operations of, and the risks borne by, the designated financial market utility.

(2)

The financial and operational risks presented by the designated financial market utility to financial institutions, critical markets, or the broader financial system.

(3)

The resources and capabilities of the designated financial market utility to monitor and control such risks.

(4)

The safety and soundness of the designated financial market utility.

(5)

The designated financial market utility’s compliance with—

(A)

this subchapter; and

(B)

the rules and orders prescribed under this subchapter.

(b)

Service providers

Whenever a service integral to the operation of a designated financial market utility is performed for the designated financial market utility by another entity, whether an affiliate or non-affiliate and whether on or off the premises of the designated financial market utility, the Supervisory Agency may examine whether the provision of that service is in compliance with applicable law, rules, orders, and standards to the same extent as if the designated financial market utility were performing the service on its own premises.

(c)

Enforcement

section 1818 of this titleFor purposes of enforcing the provisions of this subchapter, a designated financial market utility shall be subject to, and the appropriate Supervisory Agency shall have authority under the provisions of subsections (b) through (n) of in the same manner and to the same extent as if the designated financial market utility was an insured depository institution and the Supervisory Agency was the appropriate Federal banking agency for such insured depository institution.

(d)

Board of Governors involvement in examinations

(1)

Board of Governors consultation on examination planning

1 So in original. Probably should be followed by a period.

The Supervisory Agency shall consult annually with the Board of Governors regarding the scope and methodology of any examination conducted under subsections (a) and (b). The Supervisory Agency shall lead all examinations conducted under subsections (a) and (b) 

(2)

Board of Governors participation in examination

The Board of Governors may, in its discretion, participate in any examination led by a Supervisory Agency and conducted under subsections (a) and (b).

(e)

Board of Governors enforcement recommendations

(1)

Recommendation

The Board of Governors may, after consulting with the Council and the Supervisory Agency, at any time recommend to the Supervisory Agency that such agency take enforcement action against a designated financial market utility in order to prevent or mitigate significant liquidity, credit, operational, or other risks to the financial markets or to the financial stability of the United States. Any such recommendation for enforcement action shall provide a detailed analysis supporting the recommendation of the Board of Governors.

(2)

Consideration

The Supervisory Agency shall consider the recommendation of the Board of Governors and submit a response to the Board of Governors within 60 days.

(3)

Binding arbitration

If the Supervisory Agency rejects, in whole or in part, the recommendation of the Board of Governors, the Board of Governors may refer the recommendation to the Council for a binding decision on whether an enforcement action is warranted.

(4)

Enforcement action

Upon an affirmative vote by a majority of the Council in favor of the Board of Governors’ recommendation under paragraph (3), the Council may require the Supervisory Agency to—

(A)

exercise the enforcement authority referenced in subsection (c); and

(B)

take enforcement action against the designated financial market utility.

(f)

Emergency enforcement actions by the Board of Governors

(1)

Imminent risk of substantial harm

The Board of Governors may, after consulting with the Supervisory Agency and upon an affirmative vote by a majority the Council, take enforcement action against a designated financial market utility if the Board of Governors has reasonable cause to conclude that—

(A)

either—

(i)

section 5465(e) of this title an action engaged in, or contemplated by, a designated financial market utility (including any change proposed by the designated financial market utility to its rules, procedures, or operations that would otherwise be subject to ) poses an imminent risk of substantial harm to financial institutions, critical markets, or the broader financial system of the United States; or

(ii)

the condition of a designated financial market utility poses an imminent risk of substantial harm to financial institutions, critical markets, or the broader financial system; and

(B)

the imminent risk of substantial harm precludes the Board of Governors’ use of the procedures in subsection (e).

(2)

Enforcement authority

2 So in original. Probably should be followed by a comma.

section 1818 of this titleFor purposes of taking enforcement action under paragraph (1), a designated financial market utility shall be subject to, and the Board of Governors shall have authority under  the provisions of subsections (b) through (n) of in the same manner and to the same extent as if the designated financial market utility was an insured depository institution and the Board of Governors was the appropriate Federal banking agency for such insured depository institution.

Pub. L. 111–203, title VIII, § 807July 21, 2010124 Stat. 1814 (, , .)