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The report also provides a brief outlook as to upcoming oversight activities. In addition, specific oversight-related matters and activities are presented more extensively in three special articles.
The Eurosystem’s oversight function
The legal basis for the oversight function – enshrined in the Treaty on the Functioning of the European Union and the Protocol on the Statute of the European System of Central Banks (ESCB) and of the European Central Bank (ECB) – has not changed since the previous report. However, the Eurosystem has further developed its oversight policies. In an update of the Eurosystem oversight policy framework in July 2011, the Eurosystem, inter alia, stated that trade repositories (TRs) were to be included in the scope of oversight. Furthermore, as the oversight function is influenced by other laws and regulations relating to payment, clearing and settlement, the Eurosystem follows and gives opinions on pertinent legislative activities. Currently, the European Commission is preparing a number of draft regulations that are of interest for the oversight function, e.g. the regulation on European market infrastructures (EMIR) and the regulation on central securities depositories (CSDR).
Regarding oversight standards, the Eurosystem developed new oversight frameworks for both credit transfer schemes and direct debit schemes in the reporting period. These new frameworks were published in October 2010. At global level, a number of Eurosystem central banks are currently deeply involved in developing new “Principles for financial market infrastructures”, of which a first draft was issued for public consultation by the Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organisation of Securities Commissions (IOSCO) in March 2011.
The Eurosystem’s oversight activities
The Eurosystem’s main oversight activities are establishing oversight policies (including oversight standards) and the monitoring and assessment of entities within the oversight scope to check whether they comply with the defined oversight policies. Changes to the oversight policies are presented, such as the review of the oversight standards for retail payment systems (RPS).
The standards are being reviewed in order to reflect better the increasing European dimension of some systems (i.e. by introducing a new category of RPS of European importance), and in view of the fact that the “CPSS Core Principles for systemically important payment systems” on which the requirements are based will soon be outdated. Other different oversight requirements for RPS are being developed, specifically intended to tackle issues related to links between systems.
The monitoring and assessment activities conducted in the reporting period relating to individual payment, clearing and settlement infrastructures and arrangements covered the broad range of the Eurosystem’s oversight scope, namely large-value and retail payment systems, correspondent banking, payment instruments, securities settlement systems (SSSs), central securities depositories (CSDs) and central counterparties (CCPs). Oversight activities were either conducted by Eurosystem central banks individually (for example, in the case of RPS), or collectively with other central banks (for the large-value payment systems TARGET2 and EURO1). Moreover, the Eurosystem cooperated with other authorities, especially securities regulators, with respect to the oversight of securities and derivatives related infrastructures.
Outlook
A key task will be the review of the Eurosystem’s oversight policies once the new CPSS-IOSCO principles have been finalised, while continuing to oversee infrastructures and other arrangements. Further examples of upcoming oversight activities include the first assessment of the SEPA credit transfer (SCT) and direct debit (SDD) schemes and the eighth survey on correspondent banking in euro.