The Committee on Payment and Settlement Systems (CPSS) and International Organization of Securities Commissions (Iosco) member states have made "substantial progress" towards implementing principles for financial market infrastructures (PFMIs), according to a report published yesterday.
The principles were published in April 2012, and a year later, CPSS and Iosco asked jurisdictions to self-assess their progress toward applying them to the five types of financial market infrastructure: central counterparties (CCPs); payment systems; central securities depositories; securities settlement systems; and trade repositories.
In particular, the assessment focused on whether they had established the legal capacity to "carry out and act in accordance with" the principles. In some countries, this will require a change in legislation.
Most jurisdictions, the report said, have begun the process of implementation. "Few have completed the process for all types of FMIs, but many are making good progress and expect to be well advanced by the end of the year."
Although the principles are uniform, each jurisdiction will have to jump through different regulatory hoops to implement them. Some operate with a specific regulatory framework that will need to be changed, the report notes. In other cases, local authorities have discretionary powers that will allow them to apply the standards more easily.
Some jurisdictions are implementing the principles all at once, while others are "supplementing their existing standards to make them consistent" with the principles.
FSB on FMI resolution
The FSB stressed that FMIs "play an important role in the resolution of any of their participants and should endeavour to minimise disruption to [the] critical functions" the FMIs provide.
The initial key attributes were endorsed by Group of 20 leaders in November 2011 as the international standard for resolution regimes, and were designed as an "umbrella standard" for all types of financial institutions that are potentially systemically significant or critical in failure.
Mark Carney, the FSB chair, said yesterday's guidance was designed to address the fact that - when compared to banks - the resolution of firms from other financial sectors "has lagged behind".
"In light of the move towards mandatory clearing of over-the-counter derivatives, robust resolution regimes for CCPs are particularly important to ensure that greater reliance on CCPs does not result in a new category of too-big-to-fail institutions," he said.
The FSB also launched a consultation on a set of principles "for the design of national legal gateways and confidentiality regimes to allow the sharing of non-public information" between domestic and foreign authorities "necessary for planning and carrying out resolution".
The ‘gateways' cover the range of authorities that should have access to otherwise private information, when disclosure should be permitted, and the restrictions that should then apply once the information has been shared.