Are Financial Market Utilities Exempt From The Corporate Transparency Act? 

There are 23 separate exemptions from the CTA's beneficial ownership reporting requirement. The exemptions are listed in order in FinCEN's Final Rule at 31 CFR 1010.380 and take effect on January 1, 2024.

CTA Exemptions Generally

In general, the CTA exempts companies that already report their beneficial ownership to the U.S. government under a separate legal framework. FinCEN's Final Rule addresses each exemption separately in subsection 1010.380(c)(2).

Exemption Number 17 - Financial market utility

Subsection 1010.380(c)(2)(xvii) of the Final Rule exempts:

(xvii) Financial market utility. Any financial market utility designated by the Financial Stability Oversight Council under section 804 of the Payment, Clearing, and Settlement Supervision Act of 2010 (12 U.S.C. 5463).

Section 804 of the Payment, Clearing, and Settlement Supervision Act of 2010 (12 U.S.C. 5463) was adopted in the wake of the 2007-2008 financial crisis to create a "financial stability oversight council" that was empowered to designate certain "financial market utilities or payment, clearing, or settlement activities" that the council determined are "systemically important."

In doing so, the statute requires the council to consider:

(A)The aggregate monetary value of transactions processed by the financial market utility or carried out through the payment, clearing, or settlement activity.

(B)The aggregate exposure of the financial market utility or a financial institution engaged in payment, clearing, or settlement activities to its counterparties.

(C)The relationship, interdependencies, or other interactions of the financial market utility or payment, clearing, or settlement activity with other financial market utilities or payment, clearing, or settlement activities.

(D)The effect that the failure of or a disruption to the financial market utility or payment, clearing, or settlement activity would have on critical markets, financial institutions, or the broader financial system.

(E)Any other factors that the Council deems appropriate