What is a systemically important financial market utility?

A systemically important financial utility (SIFU) is an entity whose failure could pose a threat to the stability of the United States financial system. The Dodd-Frank Act of 2010 recognised the key role that these firms play in enabling payments, securities, and other financial transactions between financial institutions.

Where have you heard about a systemically important financial market utility?

You may not have heard of a systemically important financial utility but you’ll probably have heard of the Dodd-Frank Act that created this class of financial entity, and which is implementing new regulations across the financial markets to avoid a repeat of the 2008 financial crisis.

What you need to know about a systemically important financial market utility.

Along with systemically important financial institutions (SIFIs), systemically important financial utilities (SIFUs) are a key component of the financial infrastructure of the United States. The eight designated utilities include those providing clearing and settlement services for equities, bonds, exchange-traded futures and options and other securities such as the Chicago Mercantile Exchange, the Depositary Trust Company and the Fixed Income Clearing Corporation. A failure of one of these SIFUs could risk credit or liquidity problems between financial institutions and therefore pose a risk to the overall financial system. The Federal Reserve is responsible for their supervision.