CPMI and IOSCO Outline Lessons Learned on Cooperation Among FMIs
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.
Related Links
Keywords: International, Banking, Securities, PFMI, FMI, Systemic Risk, Responsibility E, Supervisory Convergence, Lessons Learned, CPMI, IOSCO
Featured Experts
Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Previous Article
EBA Updates Guidelines on Reporting of Funding Plans of BanksRelated Articles
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
Global Agencies Focus on ESG Data, Climate Litigation and Nature Risks
At the global level, supervisory efforts are increasingly focused on addressing climate risks via better quality data and innovative use of technologies such as generative artificial intelligence (AI) and blockchain.
ISSB Standards Shine Spotlight on Comparability of ESG Disclosures
The finalization of the IFRS sustainability disclosure standards in late June 2023 has brought to the forefront the themes of the harmonization of sustainability disclosures
EBA Issues Several Regulatory and Reporting Updates for Banks
The European Banking Authority (EBA) recently issued several regulatory publications impacting the banking sector.
BCBS Proposes to Revise Core Principles for Banking Supervision
The Basel Committee on Banking Supervision (BCBS) launched a consultation on revisions to the core principles for effective banking supervision, with the comment period ending on October 06, 2023.
US Proposes Final Basel Rules, Transition Period to Start in July 2025
The U.S. banking agencies (FDIC, FED, and OCC) recently proposed rules implementing the final Basel III reforms, also known as the Basel III Endgame.
FSB Report Outlines Next Steps for Climate Risk Roadmap
The Financial Stability Board (FSB) recently published the second annual progress report on the July 2021 roadmap to address climate-related financial risks.
EBA Plans on Ad-hoc ESG Data Collection and Climate Scenario Exercise
The recognition of climate change as a systemic risk to the global economy has further intensified regulatory and supervisory focus on monitoring of the environmental, social, and governance (ESG) risks.
