The review, in which both the IMF and the World Bank are participating, is part of the Financial Stability Board's work to reduce risks arising from interconnectedness in the financial system. The aim is to issue a draft of all the revised standards for public consultation by early 2011.
The Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) have launched a comprehensive review of their existing standards for financial market infrastructures such as payment systems, securities settlement systems and central counterparties.
There are three sets of standards involved, namely:
Financial market infrastructures generally performed well during the recent financial crisis, and did much to help prevent the crisis becoming more serious than it actually was. Nevertheless, the committees believe that there are lessons to be learned from the crisis and, indeed, from the experience of more normal operation in the years that have passed since the standards were originally issued. It thus seems timely to review the standards with a view to strengthening them where appropriate.
Robust financial market infrastructures make an essential contribution to financial stability by reducing what could otherwise be a major source of systemic risk. Moreover, insofar as they enable settlement to take place without significant counterparty risk, they also help markets to remain liquid even during times of financial stress.
The review will be led by representatives of the central banks who are also members of the CPSS and those of the securities regulators who are also members of the IOSCO Technical Committee. The International Monetary Fund and the World Bank are also participating in the review, which is part of the Financial Stability Board's work to reduce risks arising from interconnectedness in the financial system.
The committees will coordinate with other relevant authorities and communicate with the industry, as appropriate, as the work progresses. They aim to issue a draft of all the revised standards for public consultation by early 2011.
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