Principles for Financial Market Infrastructures

April 2012

Contains 24 principles to be observed by financial market infrastructures (systemically important payment systems, central securities depositories, securities settlement systems, central counterparties and trade repositories) and five responsibilities of relevant authorities in regulating, supervising and overseeing these infrastructures.

The new report replaces the previous three sets of standards for these FMIs, issued in 2001-2004. Compared to the standards they are replacing, the new principles are updated, harmonised and strengthened. These stronger standards are designed to make FMIs more resilient to financial crises and, in particular, participant defaults. The report incorporates more than a decade of experience with international standards for FMIs, important lessons from the financial crisis and recent policy work by the CPSS, IOSCO and other international standard-setting bodies. The report also incorporates feedback from extensive formal and informal market consultation. In addition, the report supports the initiatives of the Group of Twenty Finance Ministers and Central Bank Governors (G20) and the FSB to strengthen core financial infrastructures and markets. In general, the standards are principles-based in recognition that different FMIs may have different approaches to achieve a particular result. In some cases, however, the standards set out a specific minimum requirement to ensure a common minimum level of risk-management across FMIs and countries. Overall, the new principles have strengthened risk-management guidance, provided new requirements and broadened the scope and applicability of principles to different types of FMIs, such as TRs. For example, the principles require that certain FMIs maintain a higher level of financial resources to address credit, liquidity and general business risk than in the past. Equally important, the principles provide greater guidance on governance for an FMI's operations. Further, the principles provide more-detailed guidance on the risks associated with tiered participation in FMIs and place new emphasis on transparency. The principles are complemented by five responsibilities of authorities to provide for the effective regulation, supervision and oversight of FMIs. These principles and responsibilities are consistent with G20 and FSB strategies of cooperation, access and resolution for CCPs.

Assessment Methodology

Contains a detailed methodology for determining the degree to which an FMI observes the principles and a relevant authority observes the responsibilities.