Implementation monitoring of PFMIs: Level 2 assessment report for central counterparties and trade repositories - European Union

February 2015

The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) continue to closely monitor the implementation of the Principles for financial market infrastructures (PFMI). The principles within the PFMI (the Principles) set expectations for the design and operation of key financial market infrastructures to enhance their safety and efficiency and more broadly, to limit systemic risk and foster transparency and financial stability.

This report represents a "Level 2" assessment of the regulatory or oversight framework applied to systemically important central counterparties (CCPs) and trade repositories (TRs) in the European Union. Level 2 assessments are peer-reviews that examine whether, and to what degree, the content of the legal and regulatory or oversight framework is complete and consistent with the Principles.

In the European Union, different authorities are responsible for the regulatory, supervisory and oversight frameworks applicable to CCPs and TRs. There are overlapping responsibilities between the authorities with supervisory power over CCPs (whose approach to implementing the PFMI is primarily rules-based) and the central banks with oversight authority over CCPs (whose approach to implementing the PFMI is policy-based). For TRs there is no such overlap; the responsibility for regulation of TRs is carried out by one European Union-level authority (primarily via a rules-based approach).

An assessment of the regulatory, supervisory and oversight frameworks for CCPs found that for a number of the participating individual European Union countries, the overlay of supervisory regulations and central bank oversight was sufficient to achieve full consistency with the Principles. For TRs, while a number of the supervisory regulations were found to be consistent or broadly consistent with the Principles, implementation has been more limited.

The assessment reflects the status of the legal, regulatory and policy frameworks in the European Union as at 18 April 2014.  Notable changes in the EU framework that have occurred since that date are mentioned in the report but not reflected in the assessment.

Level 2 assessment reports for the Japan and the United States have also been published concurrently with this report, and are available on the CPMI and IOSCO websites.