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 (PFMI report). The new standards (called "principles") 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 PFMI report does 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 report also outlines the general responsibilities of relevant authorities for FMIs in implementing these standards. Together with this report, CPSS and IOSCO also published Assessment methodology for the principles for FMIs and the responsibilities of authorities and the Disclosure framework for financial market infrastructures.
The PFMI report is part of a set of 12 key standards that the international community considers essential to strengthen and preserve financial stability. As such, the principles 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).
The PFMI report was 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.
