The SEC, the Commodity Futures Trading Commission (CFTC) and the Federal Reserve are drawing attention to the release of a consultative report on Principles for financial market infrastructures (tinyurl.com/4pxhzgs), which the Bank for International Settlements (BIS) said contains new and more demanding international standards for payment, clearing and settlement systems.
The Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) released the report for comment. The CPSS and IOSCO expect these principles to play an important role in the future regulation of financial market infrastructures (FMIs) around the world.
The SEC and CFTC are members of the Technical Committee of IOSCO. The Federal Reserve is a member of the CPSS.
The consultative report contains updated and new proposed international principles for systemically important payment systems, central securities depositories, securities settlement systems, central counterparties and trade repositories (collectively FMIs). These FMIs collectively record, clear and settle transactions in financial markets.
Principles outlined in the report are “designed to ensure that the essential infrastructure supporting global financial markets is even more robust and thus even better placed to withstand financial shocks than at present,” the BIS said.
The 24 proposed principles would replace existing CPSS and CPSS-IOSCO standards for payment, clearing and settlement systems previously published in the Core Principles for Systemically Important Payment Systems (tinyurl.com/4ctudxk), Recommendations for securities settlement systems (tinyurl.com/5rjavfy) and Recommendations for Central Counterparties (tinyurl.com/5r5vktn) and introduce principles for trade repositories for the first time.
The BIS said the new principles introduce more demanding requirements in many important areas, including:
- The financial resources and risk management procedures an FMI uses to cope with the default of participants;
- The mitigation of operational risk; and
- The links and other interdependencies between FMIs through which operational and financial risks can spread.
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