1 WFC 2015, Mexico Worldwide implementation of the PFMI Froukelien Wendt, Monetary and Capital Markets Department, IMF

History 2 New principle on general business risk New principle on tiered participation New distinct principles on liquidity and credit risks New principle on default procedures and segregation and portability General organization (Principle 1-3) Credit risk (Principle 4-7) Settlement (Principle 8-10) CSD (Principle 11,12) Default management (Principle 13,14) Operational risk (Principle 15-17) Access (Principle 18-20) Efficiency (Principle 21, 22) Transparency (Principle 23, 24) 1990 Lamfalussy report 2001 CPSS Core Principles for SIPS 2001 CPSS-IOSCO Recommenda- tions for SSS 2004 CPSS-IOSCO Recommenda- tions for CCPs 2012 CPSS-IOSCO Principles for FMIs

3 Standard setting bodies Committee on Payments and Market Infrastructures (CPMI)* CPMI-IOSCO International Organization of Securities Committees (IOSCO) Financial Stability Board (FSB) Relevant publications on Financial Market Infrastructures since 2012:  CPSS-IOSCO, Principles for Financial Market Infrastructures, April 2012  CPSS-IOSCO, Disclosure Framework and Assessment Methodology, December 2012  CPMI-IOSCO, Oversight Expectations for Critical Service Providers, December 2014  CPMI, Cyber resilience in financial market infrastructures, November 2014  CPMI-IOSCO, Recovery of Financial Market Infrastructures, October 2014  FSB, Key Attributes of effective resolution regimes of financial institutions, with and appendix on financial market infrastructures, October 2014  CPMI-IOSCO, Implementation Monitoring, three reports so far: August 2013, May 2014 and February 2015 * Used to be the Committee on Payment and Settlement Systems (CPSS) until September 2014.

4 What is The new principles raise the bar for FMIs Increased requirements for the comprehensive management of risk. The principles focus on the identification, monitoring, management and mitigation of various types of risk Ability of the FMI to cope with extreme circumstances Disclosure of information by the FMI Increased testing, including stakeholders Implementation of PFMI no longer voluntary Principles to be reflected in the legal and regulatory framework of a country CPMI and IOSCO members commit to apply them “to the fullest extent possible” Original deadline was end of 2012

5 Implementation – where do we stand? Implementation in the legal and regulatory framework → responsibility of authorities Have jurisdictions adopted the PFMI in their legal and regulatory framework? How consistent are the rules with the PFMI? How consistent are PFMI implemented across countries Implementation by CSDs and other FMIs → responsibility of CSD / FMI Self assessments / disclosure on Internet See next slides Work starts H Ongoing

6 Have jurisdictions adopted the PFMI in their legal framework? Source: CPSS-IOSCO Implementation monitoring of PFMIs – First update to Level 1 assessment report, May 2014 The assessments covered the following jurisdictions: Argentina, Australia, Belgium, Brazil Canada, Chile, China, European Union, France, Germany, Hong Kong SAR, Indonesia, India, Italy, Japan, Korea, Mexico, Netherlands, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States. Recent analysis shows catching up for CSD regulations

7 How consistent are legal frameworks with the PFMI? Source: CPMI-IOSCO Implementation monitoring of PFMIs – Level 2 assessment reports, February 2015

8 Conclusions and next steps Conclusions:  Authorities have started the PFMI implementation and work is progressing, but far from finished  Not all CSDs have conducted a – publicly disclosed - self assessment Next steps:  Authorities:  Further implementation of PFMI in legal frameworks, especially for CSDs  Extend consistency check to other countries (first CCPs, then other FMIs  Assessment of FMIs across borders  CSDs:  Conduct self assessment  Work on identified gaps  Publicly disclose self assessment (in case not done yet)

9 Thank you Q&A

10 Annex: PFMI implementation monitoring exercise Dedicated CPMI-IOSCO Group installed in Level 1 (jurisdictional self assessment):  Whether jurisdictions have completed the process of adopting the legislation and other policies implementing the PFMI  First results presented in August 2013,  Update in May 2014,  Second update is in progress. Level 2 (CPSS-IOSCO assessment):  Whether the adopted measures are complete and consistent with the Principles and Responsibilities  First results for the U.S., Europe and Japan in February 2015,  A review of authorities’ implementation of the responsibilities is in progress Level 3 (CPSS-IOSCO assessment):  Whether there is consistency in the outcomes arising from the implementation of the Principles and Responsibilities  A second set of Level 2 assessments against the principles are scheduled to start by mid Work on level 3 assessments is planned for later in 2015.