The Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) published in April 2012 the new 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). 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 over-the-counter (OTC) derivatives CCPs and TRs. In general, these new standards are expressed as broad principles in recognition of FMIs' differing organisations, functions and designs and the range of ways potentially available in relation to some issues to achieve a particular result. In some cases, however, the PFMIs 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 PFMIs also outline the general responsibilities of relevant authorities for FMIs in implementing these standards
The PFMIs 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 was submitted to public consultation to achieve an international consensus.
The PFMIs are part of a set of 12 key standards that the international community considers essential to strengthen and preserve 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, CPSS and IOSCO have also published Principles for financial market infrastructures: disclosure framework and assessment methodology. The disclosure framework and the assessment methodology promote consistent disclosures of information by FMIs and consistent assessments by international financial institutions and national authorities.
For the PFMIs to be fully effective, it is vital that they are implemented consistently in all jurisdictions. In addition, the PFMIs are an important part of the FSB's and G20's objectives to reform the global financial system and to enhance global financial stability more broadly. CPSS and IOSCO members committed to adopting the new principles by the end of 2012 as far as possible and to putting them into effect as soon as possible. FMIs are also expected to observe the principles as soon as possible. In 2013, CPSS and IOSCO have begun to jointly monitor status of the implementation of the PFMIs in selected jurisdictions. Information on progress will be gathered regularly from those jurisdictions and the results will be published on this website.
