IOSCO publishes comments on its Consultative Report on Recovery and resolution of FMIs

18 January 2013

The purpose of the report was to outline the issues that should be taken into account for different types of FMIs when putting in place effective recovery plans and resolution regimes that are consistent with the Principles and Key Attributes.

Financial market infrastructures (FMIs) 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.

The CPSS-IOSCO Principles for financial market infrastructures (Principles) published in April 2012 require that FMIs have effective strategies, rules and procedures to enable them to recover from financial stresses. The Financial Stability Board's Key Attributes of Effective Resolution Regimes for Financial Institutions (Key Attributes) published in October 2011 further require that jurisdictions establish resolution regimes to allow for the resolution of a financial institution in circumstances where recovery is no longer feasible. An effective resolution regime must enable resolution without systemic disruption or exposing the taxpayer to loss. To achieve this in the context of FMIs, relevant  authorities must have powers to maintain an FMI's critical services.

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