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CPSS-IOSCO’S PROPOSED PRINCIPLES FOR FINANCIAL MARKET INFRASTRUCTURES

ACSDA LEADERSHIP SEMINAR BERMUDA 23 -25 MARCH 2011. CPSS-IOSCO’S PROPOSED PRINCIPLES FOR FINANCIAL MARKET INFRASTRUCTURES. Moderator: Monica Singer, CEO, Strate, South Africa (By video) Jeffrey S. Mooney, Assistant Director, Division of Trading and Markets,

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CPSS-IOSCO’S PROPOSED PRINCIPLES FOR FINANCIAL MARKET INFRASTRUCTURES

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  1. ACSDA LEADERSHIP SEMINAR BERMUDA 23 -25 MARCH 2011 CPSS-IOSCO’S PROPOSED PRINCIPLES FOR FINANCIAL MARKET INFRASTRUCTURES Moderator: Monica Singer, CEO, Strate, South Africa (By video) Jeffrey S. Mooney, Assistant Director, Division of Trading and Markets, U.S. Securities and Exchange Commission Froukelien Wendt, Senior Securities Settlement Specialist, Financial and Private Sector Development, World Bank

  2. CPSS / IOSCO standards over the years 11/2004 Global Financial crisis 2/2010 3/2011 11/2001 1/2001 • Recommendations for Central Counterparties • RCCP Review of CPSIPS, RSSS and RCCP • Recommendations for securities settlement systems • RSSS 15 • Core principles for systemically important payment systems • CPSIPS 19 Consultative document released 24 principles 5 responsibilities LESSONS LEARNT 10 Replaces: CDSIPS RSSS & RCCP

  3. Consultation process – During 2011 Committee on Payment and Settlement Systems International Organisation of Security Commissions Technical Committee CPSS - IOSCO All members of both organizations entitled to participate – 4 month consultative process deadline 29/07/2011 Expected final report in early 2012

  4. Importance of the 2011 review • Financial Market infrastructures ("FMIs"), as we all know, play a critical role in maintaining and promoting financial stability • Limit systemic risk and foster transparency and financial stability • FMIs, in general, performed well during the Global Financial crisis BUT • FMIs also concentrate risk; and, • Poor management could pose significant risk to our financial systems • FMI includes five key types of FMI • Payment system • CSDs • SSS (Securities Settlements Systems) • CCPs • TR (trade repository) As TRUSTED 3rd PARTIES we have a duty! TO MANAGE RISKS AND BE EFFICIENT

  5. Comments expected in all principles but in particular • Principle 4 – Credit risk • Principle 7 – Liquidity risk • Principle 14 – Segregation and portability • Principle 15 – General business risk • Principle 18 to 20 – Access and interoperability

  6. THE REPORT • The Report Focuses on preventing illiquidity and insolvency of an FMI to prevent and control systemic risks • Does not address the resolution in the event of insolvency of a FMI

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