31 July 2012

CPSS-IOSCO issue consultative report on the recovery and resolution of financial market infrastructures

Financial market infrastructures play an essential role in the global financial system. The disorderly failure of an FMI can lead to severe systemic disruption if it causes markets to cease to operate effectively. Comments are requested by 28 September, 2012.

The purpose of the report is to outline the issues that should be taken into account for different types of financial market infrastructures (FMIs) when putting in place effective recovery plans and resolution regimes that are consistent with the Principles and Key Attributes. The report also seeks consultees’ views on a number of technical points related to these issues.

Paul Tucker, Deputy Governor, Financial Stability of the Bank of England and CPSS Chairman said: “The vital role of the financial system’s infrastructure makes it essential that credible recovery plans and resolution regimes exist. FMIs need to be a source of strength and continuity for the financial markets they serve.”

“This is even more important as a safeguard given the commitment made by G20 Leaders in 2009 that all standardised OTC derivatives should be cleared through central counterparties”, added Masamichi Kono, Vice Commissioner for International Affairs, Financial Services Agency, Japan and Chairman of the IOSCO Board. Amongst its conclusions, the report states that the Key Attributes will provide a framework for resolution of FMIs under a statutory resolution regime.

Published alongside the report is a cover note that lists the specific issues on which the committees seek comments during the public consultation period.

Comments on the report are invited from all interested parties and should be sent by 28 September, 2012. After the consultation period, CPSS-IOSCO will report on how the methodology for assessing compliance with the Key Attributes, currently being prepared by the Financial Stability Board, should be revised to reflect FMI-specific elements taking into account the conclusions of this report and the comments received.

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