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Market Infrastructure

The strength, resiliency and transparency of financial market infrastructure - the foundation of our financial system - have become even more important with the passage of the Dodd-Frank Act. Many firms responsible for providing market infrastructure services will now be classified as systemically significant to our financial system and will be deemed “designated financial market utilities.” As such, they will be subject to the enhanced supervision of the Financial Stability Oversight Council.

Promontory has assisted a number of the firms that will be designated financial market utilities. We are familiar with the SEC, CFTC and Federal Reserve Board supervision of, and regulatory expectations with respect to, such entities. Our team has extensive experience in (i) reviewing and enhancing their compliance and risk management infrastructures, including their new products and initiatives approval processes, and systemic risk program development; (ii) reviewing and enhancing their internal audit programs; (iii) designing, evaluating and managing surveillance and compliance systems; and (iv) advising such firms on the applicable regulatory restrictions and requirements, including capital requirements.

Areas of Expertise:

Derivatives Clearing Organizations
Securities Clearing Associations
Securities Exchanges and Designated Contract Markets
Compliance and Risk Management
Corporate Governance and Controls Assessment
Membership and Access Requirements

Representative Engagements

Promontory has provided ongoing advice to a derivatives clearing organization with respect to IOSCO/CPSS requirements for “qualifying central counterparties” under the Basel capital regime.
Promontory reviewed a derivatives clearinghouse’s compliance risk management program against regulatory expectations and requirements; identified gaps in the compliance risk management program; developed a project plan for remediating such gaps; and drafted and developed new and enhanced policies, procedures, monitoring and testing programs, compliance training programs, and risk assessment methodologies for the clearinghouse.
Promontory conducted a review of corporate governance and controls, the internal audit program, the market and credit risk management program, and the new initiatives approval process of an entity that has within its corporate structure a securities clearing association, a derivatives clearing organization and a trade repository.

Market Infrastructure

Representative Engagements

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