Principles for Financial Market Infrastructures (PFMI)
Updated 11 December 2015
In April 2012, the then Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) published the standards report Principles for financial market infrastructures (PFMIs). The new standards replace the three existing sets of international standards set out in the Core principles for systemically important payment systems (CPSS, (2001)); the Recommendations for securities settlement systems (CPSS-IOSCO, (2001)); and the Recommendations for central counterparties (CPSS-IOSCO, (2004)). The CPSS and IOSCO have strengthened and harmonised these three sets of standards by raising minimum requirements, providing more detailed guidance and broadening the scope of the standards to cover new risk management areas and new types of FMIs.
The report also incorporates additional detailed guidance for CCPs and TRs handling over-the-counter (OTC) derivatives . In general, these new standards are expressed as broad principles in recognition of FMIs' differing organisational structures, functions and designs and the range of methods available to achieve a particular result in a given area. In some cases, however, the PFMI do incorporate a specific quantitative minimum requirement (such as in the credit, liquidity and general business risk principles) to ensure a common base level of risk management across FMIs and countries. In addition to the new principles themselves, the PFMI also outline the general responsibilities of relevant authorities for FMIs in implementing these standards.
The PFMI were prepared by CPSS and IOSCO experts from both industrialised and emerging market economies, as well as experts from the IMF and the World Bank, and were submitted for public consultation with a view to achieving an international consensus.
The PFMIs are part of a set of 12 key standards that the international community considers essential to strengthening and preserveing financial stability. As such, the PFMIs will also be used by the joint IMF/-World Bank "Financial Sector Assessment Programme" (FSAP) and the "Reports on the Observance of Standards and Codes" (ROSC).
Accompanying this report, the CPSS and IOSCO also published Principles for financial market infrastructures: disclosure framework and assessment methodology and a report entitled Recovery of financial market infrastructures. The former, the disclosure framework and the assessment methodology, promotes consistent disclosures of information by FMIs and consistent assessments by international financial institutions and national authorities. The latter provides guidance to FMIs such as CCPs on how to develop plans to enable them to recover from threats to their viability and financial strength that might prevent them from continuing to provide critical services to their participants and the markets they serve, along with the guidance to relevant authorities in carrying out their responsibilities associated with the development and implementation of recovery plans.