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Press release

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16 April 2012)

CPSS-IOSCO issue new standards for financial market
The Committee on Payment and Settlement Systems (CPSS) and the
International Organization of Securities Commissions (IOSCO) have today
published three documents that promote global efforts to strengthen financial
market infrastructures (FMIs):

a report entitled Principles for financial market infrastructures;


a consultation paper on an Assessment methodology for these new
standards; and


a consultation paper on a Disclosure framework for the standards.

New and more demanding international standards for payment, clearing and
settlement systems, including central counterparties, have today been issued by
the CPSS and IOSCO in a report titled Principles for financial market
infrastructures. Among other things, the principles will provide important support
for the G20 strategy to make the financial system more resilient by making central
clearing of standardised OTC derivatives mandatory. CPSS and IOSCO members
will strive to adopt the new standards by the end of 2012. Financial market
infrastructures (FMIs) are expected to observe the standards as soon as possible.
The new standards (called "principles") replace the three existing sets of
international standards set out in the Core principles for systemically important
payment systems (CPSS, 2001); the Recommendations for securities settlement
systems (CPSS-IOSCO, 2001); and the Recommendations for central
counterparties (CPSS-IOSCO, 2004). CPSS and IOSCO have strengthened and
harmonised these three sets of standards by raising minimum requirements,
providing more detailed guidance and broadening the scope of the standards to
cover new risk-management areas and new types of FMIs.
The new principles are designed to ensure that the infrastructure supporting
global financial markets is robust and thus well placed to withstand financial
shocks. They apply to all systemically important payment systems, central
securities depositories, securities settlement systems, central counterparties and
trade repositories (collectively “financial market infrastructures”). These FMIs
collectively clear, settle and record transactions in financial markets.
"FMIs performed well during the financial crisis and we gained a deeper
understanding of their true importance. Robust FMIs help markets to continue
functioning even in conditions of great uncertainty, making them a fundamental
element of financial stability," said Masamichi Kono, Vice Commissioner for

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International Affairs, Financial Services Agency, Japan and Chairman of IOSCO’s
Technical Committee.
William C Dudley, President, Federal Reserve Bank of New York and a co-chair of
the CPSS-IOSCO work on the standards, noted that "Under the new regime of
central clearing for standardised OTC derivatives trades, the role of FMIs will
become even more important in the future. The principles provide an important
safeguard that FMIs will be robust enough to take on this role".
Paul Tucker, Deputy Governor, Financial Stability, Bank of England and CPSS
Chairman, added that "With these new principles, authorities have a good basis on
which to ensure a safe and stable financial infrastructure. It is essential that
authorities adopt the principles, and FMIs observe them, as soon as possible".
Compared with the old standards, the new principles introduce new or more
demanding requirements in many important areas including:

the financial resources and risk management procedures an FMI uses to
cope with the default of participants;


the mitigation of operational risk;


the links and other interdependencies between FMIs through which
operational and financial risks can spread;


achieving the segregation and portability of customer positions and


tiered participation; and


general business risk.

The steering group that carried out the work on behalf of the CPSS and IOSCO
was chaired by William C Dudley (see above), Masamichi Kono (see above; since
August 2011) and Kathleen Casey (former Commissioner of the Securities and
Exchange Commission (SEC), US; until July 2011). The editorial team that drafted
the reports was chaired by Daniela Russo (Director General, European Central
Bank) and Jeffrey Mooney (Assistant Director, SEC, US).
The principles were issued for public consultation in March 2011. The finalised
principles being issued now have been revised in light of the comments received
during that consultation (see
Consultation about assessment and transparency
At the same time as publishing the finalised principles, CPSS-IOSCO have
released two related documents for public consultation.

One is an assessment methodology that can be used to assess whether an
FMI is observing the new principles.


The other is a disclosure framework that sets out the information an FMI
should publish in order to be transparent about the risks of using the FMI.

Comments on these two documents are invited from all interested parties and
should be sent by 15 June 2012 (see note 3 below). After the consultation period,
the CPSS and IOSCO will review the comments received and publish final
versions of the two documents later in 2012.

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The CPSS and IOSCO, together with the Financial Stability Board, are also
working on guidance for designing resolution regimes for FMIs. This work will be
published in the coming months.

The two chairs of the CPSS-IOSCO editorial team (see above) are
available to provide briefing on these documents during the course of
 Daniela Russo of the European Central Bank, tel +49 171 222 1441

Jeffrey Mooney of the US SEC, tel +1 202 551 5710


The documents are on the websites of the Bank for International
Settlements (BIS) at and IOSCO at


Comments on the assessment methodology and disclosure framework
documents should be sent by Friday 15 June 2012 to both the CPSS
secretariat ( and the IOSCO secretariat (
The comments will be published on the BIS and IOSCO websites unless
commentators request otherwise.


The Committee on Payment and Settlement Systems (CPSS) serves as a
forum for central banks to monitor and analyse developments in payment
and settlement arrangements as well as in cross-border and
multicurrency settlement schemes. The CPSS secretariat is hosted by the
BIS. More information about the CPSS, and all its publications, can be
found on the BIS website at


The International Organisation of Securities Commissions (IOSCO) is an
international policy forum for securities regulators. Its Technical
Committee, that worked with the CPSS in producing these documents, is
a specialised group established by IOSCO’s Executive Committee and
made up of 18 agencies that regulate some of the world’s larger, more
developed and internationalised markets. Its objective is to review major
regulatory issues related to international securities and futures
transactions and to coordinate practical responses to these concerns.


The new principles will replace the existing standards for FMIs (see
above), which are included in the Financial Stability Board's list of 12 key
standards for sound financial systems. These key standards represent
minimum requirements for good practice that countries are encouraged to
meet or exceed (see


The disclosure framework and the assessment methodology promote
consistent disclosures of information by FMIs and consistent
assessments by international financial institutions and national
authorities. The assessment methodology is primarily intended for
external assessors at the international level, in particular the International
Monetary Fund and the World Bank. It also provides a baseline for
national authorities to assess observance of the principles by the FMIs
under their oversight or supervision and to self-assess the way they
discharge their own responsibilities as regulators, supervisors, and
overseers. The assessment methodology was developed by a sub-group
chaired by the World Bank and the IMF.

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