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8.4 Supervision

<< Title VIII Overview

8.4 Supervision

The following links provide expanded analysis within this section:


8.4        Supervision.  In a significant provision for the operation of designated Utilities, such an entity must provide notice to its Supervisory Agency 60 days in advance of any proposed change to its rules, procedures, or operations that could materially affect the nature or level of risks presented by the designated Utility.

Each Supervisory Agency, in consultation with the Fed, will issue regulations that define
and describe the standards for determining when notice is required to be 
 provided.

            The notice of a proposed change must include: (i) the nature of the change and expected effects on risks to the designated Utility, its Participants, or the market; and (ii) how the designated Utility plans to manage any identified risks.

The Supervisory Agency may require a designated Utility to provide any information necessary to assess the effect the proposed change would have on the nature or level of risks associated with the designated Utility's payment, clearing, or settlement activities and the sufficiency of any proposed risk management techniques.  The Supervisory Agency will notify the designated Utility of any objection within 60 days of the latter of the date that notice is received or the date any further information requested for consideration of the notice is received.  The review may be extended for an additional 60 days for proposed changes that raise novel or complex issues.

A desig   A designated Utility may not implement a change if the Supervisory Agency has

 given      notice of an objection.

            A designated Utility may immediately implement a change if an emergency exists and immediate implementation is necessary for the Utility to continue providing its services in a safe and sound manner.  Emergency notice must be given within 24 hours of the change. [§ 806]

8.4.1     Examination and Enforcement Regarding Designated Utilities.  The Supervisory Agency will conduct examinations of a designated Utility at least annually.  The Supervisory Agency may also examine a service provider for a designated Utility if it provides services that are integral to the operation of the Utility.  The Fed will have backup examination authority.    The Supervisory Agency will have the same enforcement authority under Section 8 of the FDI Act over the designated Utility as it would if the Utility was an insured depository institution and the Supervisory Agency was the appropriate Federal banking agency for such institution.  The Fed is given backup enforcement authority under certain circumstances. [§ 807]

  8.4.2.    Examination and Enforcement Regarding Participants.  The appropriate financial regulator is authorized to examine a financial institution with regard to matters under Title VIII.  The appropriate financial regulator will have the same enforcement authority under Section 8 of the FDI Act over the financial institution as it would if the institution was an insured depository institution and the appropriate financial regulator was the appropriate Federal banking agency for such institution.  The Fed is given backup enforcement authority under certain circumstances. [§ 807]