FRB Issues H41: Revised H.4.1 Guidance for MS Facilities 2020 LLC
Date: 2025-02-06 21:30
Summary:
The Federal Reserve Board (FRB) has released H41, an update to the H.4.1 guidance for member banks to include information related to MS Facilities 2020 LLC (MSF). This revised guidance provides additional clarity on regulatory expectations for member banks’ interactions with MSF.
Key Points:
- Expanded Scope: The revised H.4.1 guidance expands the scope of H.4.1 to include MSF, a special purpose vehicle created to facilitate the resolution of certain financial institutions.
- MSF’s Role: MSF serves as a central counterparty in certain repurchase agreement (repo) transactions involving member banks.
- Regulatory Expectations: The FRB expects member banks to conduct comprehensive due diligence and risk assessments before engaging in repo transactions with MSF.
- Documentation and Monitoring: Member banks are required to maintain adequate documentation and monitor their repo transactions with MSF to ensure compliance with applicable regulations.
- Reporting Requirements: Member banks must report certain repo transactions with MSF to the FRB on a timely basis.
Background:
MSF was established in 2020 as part of the Financial Stability Oversight Council’s (FSOC) efforts to enhance the resilience of the financial system. MSF provides liquidity support to certain financial institutions and facilitates the orderly resolution of those institutions in the event of financial distress.
Implications for Member Banks:
The revised H.4.1 guidance clarifies regulatory expectations for member banks’ interactions with MSF. Member banks should carefully review the guidance and ensure they have appropriate policies and procedures in place to comply with the requirements.
Conclusion:
The FRB’s release of H41 demonstrates its commitment to promoting a safe and sound financial system. By providing guidance on member banks’ interactions with MSF, the FRB aims to enhance financial stability and reduce the risk of systemic disruptions. Member banks should closely follow the guidance and implement the necessary measures to ensure compliance.
H41: Change to the H.4.1 to include information related to MS Facilities 2020 LLC
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