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Financial Market Infrastructure & Reform

Stable and robust markets – the mechanisms through which market players fund their assets are critical to the health of the overall financial system and the broader U.S. economy. They ensure that the system as a whole functions efficiently and effectively, facilitating the flow of credit to consumers and businesses even during times of financial stress. The Federal Reserve Bank of New York actively contributes to national and international initiatives, working with other regulators, prudential supervisors, policymakers and market participants to enhance the functioning and durability of financial markets. Key efforts include supporting reforms in the tri-party repo market, over-the-counter (OTC) derivatives, money market funds and foreign exchange settlement.

Tri-Party Repo Infrastructure Reform

The tri-party repo market is a large and important wholesale funding market in which securities dealers obtain funding for large amounts of firm and client assets. Since 2009, an interdisciplinary team of New York Fed staff has been working with market participants to make changes in market practices and settlement processes that are needed to improve the resiliency of this market to financial market stress.

Managing Foreign Exchange

The foreign exchange market is the most liquid sector of global financial markets and the one that generates the largest amount of daily cross-border payments. To support stability and resiliency in this market, the New York Fed led a working group sponsored by the Basel Committee on Banking Supervision and Committee on Payment and Settlement Systems, to revise supervisory guidance on risks linked to the settlement of foreign exchange transactions.

Money Market Funds

To help address the vulnerability to runs and mitigate their possible contribution to financial market systemic risk, the New York Fed has provided analytical expertise through its participation in an interagency workgroup that includes representatives from the Securities and Exchange Commission, U.S. Treasury Department, and Federal Reserve Board.

Over-The-Counter Derivatives

As the supervisor of some of the financial market participants most active in the OTC derivatives markets, the New York Fed understands that resilient and well-functioning OTC derivatives markets are an important component of the financial markets and the broader economy. The New York Fed is collaborating with domestic and international authorities on a variety of initiatives to support implementation of the OTC derivatives agenda set by the G20.