CPMI-IOSCO
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| CPMI-IOSCO | |
|---|---|
| Name | CPMI-IOSCO |
| Formation | 2013 |
| Type | Inter-agency standard-setting |
| Headquarters | Basel |
| Parent organizations | Bank for International Settlements; International Organization of Securities Commissions |
CPMI-IOSCO The joint group formed by the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions issues standards for financial market infrastructures, linking Bank for International Settlements, Financial Stability Board, International Monetary Fund, World Bank Group, European Central Bank and Bank of England policy discussions. Its outputs inform rulemaking by national authorities such as United States Securities and Exchange Commission, European Commission, Financial Conduct Authority, BaFin and People's Bank of China, while shaping market practice among SWIFT, Euroclear, Clearstream, DTCC and LCH participants.
Background and Mandate
The joint body was established to coordinate standards across payments, clearing, and settlement after the 2008 financial crisis, drawing on lessons from events like the Lehman Brothers collapse, the Global financial crisis of 2007–2008, and policy work by the G20 and Group of Seven. Its mandate references systemic resilience objectives advanced by the Financial Stability Board, Basel Committee on Banking Supervision, Committee on the Global Financial System and regional central banks including the Federal Reserve System and Bank of Japan. The initiative aligns with multilateral instruments such as the Dodd–Frank Wall Street Reform and Consumer Protection Act, the European Market Infrastructure Regulation, and standards promulgated by the International Organization for Standardization and Financial Action Task Force.
Organizational Structure and Membership
The joint group is co-sponsored by the Bank for International Settlements and the International Organization of Securities Commissions, with governance involving senior representatives from central banks and securities regulators like the Federal Reserve, European Central Bank, Securities and Exchange Commission (United States), China Securities Regulatory Commission, and Financial Services Agency (Japan). Membership and consultations include market infrastructure operators such as TARGET2, CLS Group, NASDAQ, SIX Group, and clearing members like Goldman Sachs, JPMorgan Chase, Morgan Stanley, Deutsche Bank and UBS. The secretariat functions are supported by BIS-hosted units and IOSCO committees, coordinating with Committee on Payments and Market Infrastructures', working groups, standing committees of the International Monetary Fund, and national ministries of finance.
Key Standards and Guidance Documents
Major deliverables include principles and guidance on systemically important payment systems, central counterparties, payment-versus-payment and delivery-versus-payment arrangements, mirroring prior frameworks such as the Principles for Financial Market Infrastructures, which interact with Basel III, Net Stable Funding Ratio, Leverage Ratio, and Principles for Sound Compensation Practices. Notable publications address cyber resilience influenced by NIST Cybersecurity Framework, resilience testing inspired by the European Banking Authority stress testing methodology, operational risk guidance referencing Committee on Payments and Market Infrastructures studies, and recovery and resolution frameworks linked to Bank Recovery and Resolution Directive and Orderly Liquidation Authority. The standards inform central counterparty requirements adopted in Commodity Futures Trading Commission rulemaking and in the European Securities and Markets Authority supervisory toolkit.
Implementation and Monitoring
Implementation relies on peer reviews, self-assessments, and monitoring by multilaterals including the Financial Stability Board and IMF Financial Sector Assessment Program, complemented by national supervisory regimes such as Prudential Regulation Authority, Office of the Superintendent of Financial Institutions (Canada), Reserve Bank of India, and Monetary Authority of Singapore. The group engages with industry through public consultations involving International Swaps and Derivatives Association, SIFMA, AFME, ISDA, ICMA and major exchanges like CME Group and Intercontinental Exchange. Compliance is evaluated via country reports, regulatory filings with bodies like European Commission services, and multilateral surveillance in forums such as G20 and Group of Twenty ministerial reviews.
Impact on Global Financial Markets
Its standards have reduced counterparty credit risk and improved settlement finality across infrastructures such as CLS Bank International, Euroclear Bank, Clearstream Banking Luxembourg and major central counterparties including LCH Ltd and CME Clearing. The guidance shaped migration to central clearing for standardized derivatives, affecting market participants including BlackRock, Vanguard Group, State Street Corporation, and reshaping liquidity management for banks complying with Basel Committee on Banking Supervision capital rules. The work influenced cross-border arrangements involving Single Euro Payments Area, TARGET2-Securities, and efforts to harmonize rules between jurisdictions like United States, European Union, China, Japan and United Kingdom.
Criticisms and Challenges
Critiques cite limits in accommodating non-bank liquidity providers such as BlackRock Financial Management, fragmented adoption across jurisdictions like United States and European Union, and difficulties reconciling competing mandates of authorities such as SEC and national central banks. Observers point to implementation costs for smaller market infrastructures including ASEAN exchanges, potential procyclicality interacting with Basel III constraints, and challenges addressing fast-evolving risks tied to cryptocurrency exchanges, DeFi protocols, and stablecoins such as debates around Libra/Diem. Questions remain about enforcement where national law diverges, supervisory colleges' effectiveness, and systemic stress testing coordination among International Monetary Fund, Bank for International Settlements and regional bodies.