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    SRB on Operational Continuity in Resolution and FMI Contingency Plans

    July 29, 2020

    SRB published guidance on operational continuity in resolution and financial market infrastructure (FMI) contingency plans. This follows the publication of a document on SRB Expectations for Banks, which sets out the capabilities that SRB expects banks to demonstrate that they are resolvable, including the dimensions of operational continuity in resolution and access to FMIs. The Expectations for Banks will be subject to a gradual phase-in according to the general phase-in dates reported in Chapter 3 of the Expectations for Banks. This also applies to the expectations with regard to operational continuity in resolution and access to FMI services, which are expected to be met by the end of 2023. SRB acknowledges the challenges that banks face due to COVID-19 pandemic and is prepared to give banks the flexibility they may need to implement the Expectations for Banks, on an individual basis.

    Operational Guidance on Operational Continuity in Resolution

    As outlined in the Expectations for Banks, operational continuity in resolution refers to the ability to effectively implement, from an operational point of view, the resolution strategy and, consequently, to stabilize and restructure a bank. The guidance on operational continuity in resolution provides further clarifications to banks on how to implement the expectations on service identification and mapping, assessment of operational continuity risk, mitigating measures such as having adequately documented, resolution-resilient contracts, appropriate management information systems, and governance arrangements. Further guidance may be provided on other operational continuity in resolution topics in line with their phase-in. 

    Operational Guidance on FMI Contingency Plans

    Banks are expected to prepare FMI contingency plans supporting continued access to critical and/or essential FMI services ahead of and during resolution. This document provides additional operational guidance for banks when preparing FMI contingency plans and clarifies the minimum standards against which internal resolution teams will assess FMI contingency plans submitted by banks. Such contingency plans enable internal resolution teams to evaluate whether the risk of losing access to a critical and/or essential FMI service provider may represent an impediment to resolvability. Indeed, when performing the resolvability assessment, SRB needs to consider the extent to which there are contingency plans and measures in place to ensure continuity in access to payment and settlement systems. The document sets out the SRB expectations with regard to the minimum content of FMI contingency plans prepared by banks. Each bank is expected to develop an FMI contingency plan in line with the July 2017 recommendations from FSB in the Guidance on Continuity of Access to FMIs for a Firm in Resolution.

     

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    Keywords: Europe, EU, Banking, Resolution Framework, Operational Continuity, Governance, Resolution Planning, SMI, Contingency Planning, SRB

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