Principles for Financial Market Infrastructures
Generated by GPT-5-miniExpansion Funnel Raw 82 → Dedup 0 → NER 0 → Enqueued 0
| Principles for Financial Market Infrastructures | |
|---|---|
| Name | Principles for Financial Market Infrastructures |
| Abbrev | PFMI |
| Issued by | Committee on Payments and Market Infrastructures |
| Published | 2012 |
| Revised | 2012, 2013 |
| Scope | global |
| Related | Basel III, Dodd‑Frank Act, European Market Infrastructure Regulation |
Principles for Financial Market Infrastructures The Principles for Financial Market Infrastructures articulate standards for central counterparties, payment systems, and settlement systems to reduce systemic risk and promote financial stability across jurisdictions. They align practices among the Bank for International Settlements, International Monetary Fund, World Bank, Financial Stability Board, European Central Bank, and national authorities such as the Federal Reserve System, Bank of England, and Deutsche Bundesbank.
Overview and Objectives
The Principles for Financial Market Infrastructures set goals for resilience, efficiency, and transparency in payment, clearing, and settlement infrastructures used by institutions like JPMorgan Chase, Goldman Sachs, Deutsche Bank AG, BNP Paribas, and Mitsubishi UFJ Financial Group. They seek to mitigate contagion exemplified by episodes such as the Global Financial Crisis of 2007–2008 and to support market functioning during stress comparable to interventions by the European Stability Mechanism, Federal Deposit Insurance Corporation, and Bank of Japan. Objectives include protecting participants akin to safeguards in Dodd‑Frank Wall Street Reform and Consumer Protection Act, fostering interoperability modeled after TARGET2, and guiding recovery planning similar to frameworks used by ING Group and HSBC Holdings plc.
Legal and Governance Framework
The Principles emphasize a robust legal basis influenced by judgments in jurisdictions including the Supreme Court of the United States, European Court of Justice, High Court of Justice (England and Wales), and statutes such as the European Market Infrastructure Regulation and national laws like the Financial Services and Markets Act 2000. Governance standards reflect practices at institutions like Chicago Mercantile Exchange, NASDAQ OMX Group, LCH Limited, and Euroclear Bank, and reference corporate governance norms observed by BlackRock, Inc., Vanguard Group, and State Street Corporation. Policies address contractual certainty, finality rules seen in Payment Systems Regulator oversight, and conflicts of interest comparable to those adjudicated by the Securities and Exchange Commission and European Securities and Markets Authority.
Risk Management and Operational Resilience
Risk-management principles cover credit, liquidity, operational, and legal risks as managed by central counterparties such as CME Group and ICE Clear, with margining and collateral frameworks resembling practices at Clearstream and SIX Group. They prescribe stress testing and recovery scenarios informed by past events like the Lehman Brothers collapse and responses by Federal Reserve Bank of New York and Bank of Canada. Operational resilience includes cybersecurity measures paralleling guidance from National Institute of Standards and Technology, European Union Agency for Cybersecurity, and incident responses similar to those at SWIFT and Visa Inc., while business continuity planning mirrors contingency arrangements used by Royal Bank of Scotland and Barclays PLC.
Access, Participation, and Competition
Access and participation principles address fair and open access models relevant to operators such as CLS Group, CHIPS, SIX x-clear, and DTCC and consider competitive dynamics shaped by mergers and acquisitions like those involving Euronext and Borse Frankfurt. They balance risk-based admission practices used by Nasdaq with anti-discrimination concerns overseen by regulators akin to Commodity Futures Trading Commission and Financial Conduct Authority. The framework contemplates interoperability projects similar to TARGET2‑Securities and multilaterally negotiated arrangements seen in European Payments Council initiatives while considering consequences for market structure debated in hearings before the United States Congress and the European Parliament.
Transparency, Disclosure, and Reporting
Principles require timely disclosure of rules, fees, and risk metrics akin to reporting by NYSE, London Stock Exchange Group, JPX, and Hong Kong Exchanges and Clearing and call for public reporting standards comparable to those of International Organization of Securities Commissions and Basel Committee on Banking Supervision. They support data collection and trade reporting regimes similar to EMIR and Trade Reporting and Compliance Engine requirements and encourage publication of stress-test results like exercises conducted by European Banking Authority and Federal Reserve. Market surveillance and recordkeeping practices mirror those enforced by Securities and Exchange Commission and Japan Financial Services Agency.
Oversight, Compliance, and Enforcement
Oversight mechanisms involve central banks, supervisors, and resolution authorities such as the Bank of England Financial Policy Committee, Federal Reserve Board, European Central Bank banking supervision, and Single Resolution Board. Compliance and enforcement tools reflect approaches used in enforcement actions by the Securities and Exchange Commission, Commodity Futures Trading Commission, and national authorities like the Autorité des marchés financiers (France), with resolution planning influenced by regimes under the Dodd‑Frank Act and the Bank Recovery and Resolution Directive. The Principles foster cross‑border cooperation similar to arrangements under the Basel Committee and memoranda of understanding exemplified by agreements between the Federal Reserve and the European Central Bank.