Excerpt from Compliance Alliance Article, Published on Mar, 10, 2024

The Federal Reserve Board unveiled a finalized rule on Friday, aiming to bolster risk management protocols for specific systemically important financial market utilities (FMUs) under the Board’s supervision. These FMUs play a pivotal role in facilitating the clearance and settlement of payments and other financial transactions, thereby underpinning the smooth functioning of financial markets and the broader economy.

The updated rule offers enhanced clarity and specificity across four critical domains of operational risk management: incident management and notification, business continuity management and planning, third-party risk management, and the review and testing of operational risk management measures. Notably, the revisions mandate FMUs to establish robust incident management frameworks and accentuate the imperative for continuous enhancement of cyber resilience capabilities.

In substance, the final updates closely mirror the initial proposal, aligning predominantly with the existing measures that FMUs typically adopt to adhere to prevailing requirements. FMUs falling within the purview of the rule must ensure compliance with specified updates within 90 days following publication in the Federal Register, with full adherence to all updates mandated within 180 days thereafter.

The finalized rule represents a concerted effort by the Federal Reserve Board to fortify the resilience and efficacy of FMUs in the face of evolving operational risks and cyber threats. By delineating clearer guidelines and reinforcing best practices, the Board endeavors to foster a more robust and secure financial infrastructure. The announcement underscores the Federal Reserve’s commitment to upholding the stability and integrity of financial markets, particularly amidst the increasing reliance on digital platforms and interconnected systems. As the landscape of financial services continues to evolve, regulatory initiatives such as these serve as vital safeguards against systemic vulnerabilities and disruptions.


To delve deeper into this topic, please read the full article on Compliance Alliance.