Document Type

Article

Publication Date

2013

Publication Information

3 Harv. Bus. L. Rev. Online 177 (2013)

Abstract

This Article analyzes the Federal Reserve’s expanded role in payment, clearing, and settlement systems, particularly in connection with certain clearinghouses that have been designated by the newly created Financial Stability Oversight Council as “systemically significant.” The Federal Reserve’s expanded role is a little understood, but critical supporting component of domestic and international regulatory reforms to the $639 trillion over-the-counter (OTC) derivative markets. These reforms mandate the increased use of clearinghouses in OTC derivative markets. Due to critical reforms in Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Federal Reserve is now positioned to ensure the stability of designated clearinghouses. Importantly, systemically significant clearinghouses are the quintessential “too big to fail” financial institutions.

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