CPMI and IOSCO published a report that shares lessons learned from the ways in which financial authorities cooperate to promote the safety and efficiency of financial market infrastructures (FMIs). This report describes ways in which authorities cooperate with each other in a variety of contexts, with emphasis on the expectations in Responsibility E of the Principles for Financial Market Infrastructures (PFMI). The practices presented in the report reflect authorities’ actual experience and elaborate on six key topics: the benefits of cooperation; triggers for cooperation; relevant authorities with regulatory, supervisory, or oversight responsibilities over FMIs; cooperation regarding a specific FMI; designing of cooperative arrangements; and tools for cooperation.
Cooperation among authorities is highly valued and has been demonstrated by central banks, market regulators, and other authorities worldwide for decades. CPMI and IOSCO have observed that cooperation among authorities is evolving and that cooperative arrangements for specific FMIs are growing in number and importance. These developments are due, in part, to the increasing globalization of financial markets, policy decisions resulting in an increased use of and reliance on FMIs, and the systemic importance of particular FMIs domestically and in multiple jurisdictions. Given these observations and the role of cooperation in the regulation, supervision, and oversight of FMIs, CPMI and IOSCO developed this report to share lessons learned by authorities.
The report is designed to share the lessons learned by a wide range of regulators, supervisors, and overseers of FMIs with cooperation. It describes the ways in which authorities cooperate with each other in a variety of contexts, with emphasis on the expectations in Responsibility E under the PFMI. Responsibility E describes how authorities should cooperate with each other, both domestically and internationally, as appropriate, in promoting the safety and efficiency of FMIs. The report includes illustrative effective practices that may inform authorities in their development of, and improvements to, cooperative arrangements for all FMI types. The report concludes with a summary of lessons learned, which reflect several themes that emerged from the review of authorities’ experience. The report may be useful to authorities in jurisdictions that are in the process of developing a regulatory framework for FMIs.
The discussion is not intended to impose additional standards beyond those set out in the PFMI or to provide additional guidance beyond that provided in Responsibility E. Instead, the report identifies and elaborates on a range of issues and practices that authorities have experienced and considered when determining whether, and how, to establish and enhance cooperation that suits their needs and fulfills their respective mandates. The report has benefited from contributions from a range of authorities with responsibilities for regulating, supervising, and overseeing all types of FMI as well as central banks of issue that have an interest in the payment and settlement arrangements of an FMI.
Keywords: International, Banking, Securities, PFMI, FMI, Systemic Risk, Responsibility E, Supervisory Convergence, Lessons Learned, CPMI, IOSCO
Sam leads the quantitative research team within the CreditEdge™ research group. In this role, he develops novel risk and forecasting solutions for financial institutions while providing thought leadership on related trends in global financial markets.
Previous ArticleESMA Updates Q&A on European Benchmarks Regulation in December 2019
APRA updated the lists of the Direct to APRA (D2A) validation and derivation rules for authorized deposit-taking institutions, insurers, and superannuation entities.
EC adopted a package that includes the digital finance and retail payments strategies and the legislative proposals for regulatory frameworks on crypto-assets and digital operational resilience.
ECB published an opinion (CON/2020/22) on proposals for regulations amending the securitization framework of EU, in response to the COVID-19 pandemic.
FCA is consulting on its approach to the authorization and supervision of international firms operating in UK.
MAS published amendments to Notice 637 on the risk-based capital adequacy requirements for reporting banks incorporated in Singapore.
FCA announced that it will move firms to RegData from Gabriel in the coming months in stages, based on the reporting requirements of firms.
ISDA issued a letter to regulators to flag that it now expects the supplement to the 2006 ISDA Definitions and the Interbank Offered Rate (IBOR) Fallbacks Protocol to be effective around mid- to late-January 2021.
APRA has concluded its review of the comprehensive plans of authorized deposit-taking institutions for the assessment and management of loans with repayment deferrals.
ESAs (EBA, EIOPA, and ESMA) published the first joint report that assesses risks in the financial sector since the outbreak of the COVID-19 pandemic.
BoE and HM Treasury confirmed that the COVID Corporate Financing Facility (CCFF) will close for new purchases of commercial paper, with effect from March 23, 2021.