Monitoring the implementation of standards

Updated 16 August 2016

The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are monitoring the implementation of the Principles for financial market infrastructures (the PFMI), issued in April 2012. The PFMI are international standards for payment, clearing and settlement systems, including central counterparties, and trade repositories. They are designed to help ensure safety, efficiency and resilience of the infrastructure supporting global financial markets. To that end, a full, timely and consistent implementation of the PFMI is fundamental.

In addition, the PFMI play an important part in the G20's mandate that all standardised over-the-counter (OTC) derivatives should be centrally cleared. Global central clearing requirements reinforce the importance of strong safeguards and consistent oversight of central counterparties (CCPs), in particular of CCPs for standardised OTC derivatives. CPMI and IOSCO members are committed to adopt the principles and responsibilities contained in the PFMI in line with the G20 expectations.

Scope of the assessments

The implementation monitoring covers the 24 principles (the "Principles") contained in the PFMI as well as responsibilities A to E (the "Responsibilities). Reviews are being carried out in three stages. Level 1 self-assessments report on whether a jurisdiction has completed the process of adopting the legislation and other policies that will enable it to implement the Principles and Responsibilities. Level 2 assessments are peer reviews of the extent to which the content of the jurisdiction's implementation measures is complete and consistent with the PFMI. Level 3 peer reviews will examine consistency in the outcomes of implementation of the Principles by FMIs and implementation of the Responsibilities by authorities.

While in the case of the Principles, Level 2 and 3 assessments are being done separately, it was considered more appropriate and efficient to carry out a combined Level 2 and 3 assessment of the Responsibilities.

The results of the assessments are published on both CPMI and IOSCO websites.

Jurisdictional coverage

The implementation monitoring covers the following jurisdictions: Argentina, Australia, Belgium, Brazil Canada, Chile, China, European Union, France, Germany, Hong Kong SAR, Indonesia, India, Italy, Japan, Korea, Mexico, Netherlands, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States. These are jurisdictions with authorities that are members of the Financial Stability Board and/or the CPMI-IOSCO Steering Group that was responsible for the development of the PFMI.

Types of FMI

In many jurisdictions, the framework for regulation, supervision and oversight is different for each type of FMI. Level 1 assessments cover the legal and regulatory changes necessary for all types of FMIs. Levels 2 and 3 assessments have been/will be at times more focused on CCPs and trade repositories (TRs), given their importance for the successful completion of the G20 commitments regarding central clearing and transparency for derivatives products.

Reports published so far

The first assessment report Implementation monitoring of PFMIs - Level 1 assessment, examining whether jurisdictions have made regulatory changes reflecting the Principles and Responsibilities, was published in August 2013 (showing the situation at 5 April 2013). The First update to Level 1 assessment report was published in May 2014 (showing the situation at 11 January 2014), the Second update was published in June 2015 (showing the situation as at 9 January 2015) and the Third update was published in June 2016 (showing the situation as at 8 January 2016). 

The first Level 2 assessment reports were published in February 2015. The three Level 2 reports focus on the implementation of the Principles for CCPs and TRs in the European Union, Japan and the United States (showing the situation at 18 April 2014). The Level 2 assessment report of Australia for all FMI types was published in December 2015 (showing the situation at 15 May 2015).

The first Level 3 assessment report was published on 16 August 2016 and reviews financial risk management and recovery practices in place at a selected set of derivatives CCPs.

The Responsibilities assessment report, covering the five Responsibilities applicable to authorities for all FMI types, was published in November 2015.

Planned monitoring activities

The next update of the Level 1 assessments will be conducted in 2017. Further Level 2 assessments against the Principles are scheduled for 2016-17. A targeted follow-up Level 3 assessment covering key gaps identified by the first Level 3 assessment is planned for 2017 (with an as of date 31 December 2016).