jerome h powell : government securities settlement opening remarks by mr jerome h powell, member of the board of governors of the federal reserve system, at the evolving structure of the us treasury market : second annual conference, federal reserve bank of new york, new york city, 24 october 2016. * * * this panel will focus on the settlement infrastructure for u. s. government securities — a vital component of the treasury market and one that is undergoing an important transition. this segment of the industry has been in a period of slow but steady consolidation for several decades now. thirty years ago, there were six banks providing a full suite of settlement services for u. s. government securities. due to mergers and exits, two firms, bank of new york mellon ( bnym ) and j. p. morgan chase ( jpmc ), have been the two dominant providers of these services since the 1990s. and soon there will be just one, given jpmc ’ s planned exit. given the importance of these services, the official sector has had a long involvement as the market structure has evolved. after the terrorist attacks of september 11, 2001, the federal reserve convened the private - sector working group on government securities clearance and settlement to recommend steps to mitigate risks to the financial system from a disruption to these services. that work led to the “ newbank ” proposal. 1 although the proposal was ultimately put aside, newbank would have been a dormant financial institution that could spring into action in the event of potential disruptions from an exit from this business by either of the clearing banks. some of today ’ s panelists were actively involved in that work. of course, at that time, the business was roughly evenly split between the two providers. today ’ s situation is very different — bnym now has over 80 percent market share, due mainly to consolidation among end users. the federal reserve has been working closely with the department of the treasury to ensure a smooth transition as jpmc prepares to exit. jpmc has said that it recognizes the need for, and its own interest in, ensuring that its exit does not disrupt the market. indeed, jpmc will itself need to rely on these services going forward. the timeline set for a gradual transition over the next two years should be sufficient to avoid significant dislocations ; however, if unexpected complications arise, that timeline may need to be adjusted. in the near term, this exit will leave bnym as the sole provider of u. s. government securities settlement and

and families, especially the most vulnerable. i am committed to pursuing the federal reserve ’ s congressionally mandated goals of price stability and maximum employment and to maintaining the strength and resilience of our financial system. i am committed to the independent and nonpartisan status of the federal reserve. if confirmed, i look forward to supporting chair powell in carrying out the responsibilities assigned to the federal reserve and in fostering transparent communication and accountability to you and the american people. i will bring a considered and independent voice to our deliberations, drawing on insights from working people, businesses, financial institutions, and communities — large and small — across the country. i will support policies that are in the interests of the american people and based on the law and careful analysis of the evidence. before closing, i want to thank my husband and daughters for their steadfast support of my work. and i would like to commend the outstanding efforts of the individuals across the federal reserve system who work so hard every day to serve the american public. 1 / 2 bis central bankers'speeches senators, i thank you for this opportunity to appear before you and for considering my nomination. i would be pleased to respond to any questions. 2 / 2 bis central bankers'speeches