HR3197-119

What This Bill Does

The Fortifying U.S. Markets From Chinese Military Aggression Act amends the Financial Stability Act to create the Financial Stability Oversight Council Advisory Committee on Economic Fallout From Chinese Military Aggression Towards Taiwan. The committee must study market implications and vulnerabilities related to Chinese military aggression toward Taiwan and create communication channels among policymakers, government agencies, and capital market constituents to prepare for a response and mitigate economic strain and market volatility. Membership includes an SEC designee, a CFTC designee, and ten FSOC-appointed members who are capital markets participants such as market makers, asset managers, exchanges, and institutional investors, or experts on geopolitical risk related to China. A market maker chairs the committee. It must meet in person at least twice per year, conduct an annual study, develop recommendations and supporting analysis, and present those recommendations to FSOC publicly, with national security portions in closed session. The advisory committee is exempt from normal termination. FSOC must issue an annual public report on banking and financial system safety and soundness, U.S. and global market losses, market capacity to handle extreme volatility through trading halts and circuit breakers, Chinese and Taiwanese U.S. listings, China's Treasury holdings, estimated U.S. economic costs, regulator action items, blockade or invasion response options, potential Chinese retaliation, market-wide circuit-breaker testing, and further engagement with market participants.

Who Benefits and How

Financial regulators benefit from a standing forum focused on Taiwan-related market shock planning. Market makers and exchanges benefit from structured engagement on trading halts, circuit breakers, and liquidity tools. Asset managers and institutional investors benefit from public reporting on Chinese aggression scenarios and U.S. market vulnerabilities. U.S. banking system supervisors benefit from analysis of safety and soundness risks tied to Taiwan conflict scenarios. Taiwan-risk policy analysts benefit from a formal channel into FSOC's financial stability planning.

Who Bears the Burden and How

FSOC staff must appoint members, support meetings, analyze recommendations, and publish annual reports. SEC and CFTC designees must participate in the committee's studies and recommendations. Capital markets participants serving on the committee must attend meetings and develop analysis. Chinese and Taiwanese issuers listed in the United States face scrutiny in annual market vulnerability reporting. Treasury market analysts must evaluate China's potential reduction or elimination of U.S. Treasury holdings.

Key Provisions

• Establishes an FSOC Advisory Committee on Economic Fallout From Chinese Military Aggression Towards Taiwan.
• Requires SEC, CFTC, market participant, and China geopolitical risk expert membership.
• Requires at least two in-person meetings per year and annual studies, recommendations, and public presentations.
• Exempts the advisory committee from normal termination rules.
• Requires FSOC annual reports on market vulnerabilities, banking safety, trading halts, listings, Treasury holdings, economic costs, retaliation, and regulator action items.