|Michael Cohn, Accounting Today|
A pair of international standard-setters have released a final report on the principles for financial market infrastructures, aimed at strengthening the risk management and related standards for the financial markets.
"FMIs performed well during the financial crisis and we gained a deeper understanding of their true importance,” said
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 collateral; tiered participation; and general business risk.
CPSS and IOSCO also released for comment on Monday a Disclosure Framework for Financial Market Infrastructures and an Assessment Methodology for the Principles for FMIs and the Responsibilities of Authorities. The Disclosure Framework outlines basic information that FMIs should disclose to increase transparency of their governance, risk management, and operations in order to inform participants, authorities, and the public and to facilitate comparisons across FMIs. Under Principle 23 of the Principles for Financial Market Infrastructures, FMIs would be required to complete the Disclosure Framework and disclose their answers publicly on a regular basis.
The Assessment Methodology provides guidance for assessing and monitoring observance of the principles. It is primarily intended for external assessors at the international level. It also provides a baseline for national authorities to assess FMIs under their oversight or supervision.
CPSS and IOSCO released for comment the Disclosure Framework and the Assessment Methodology.
The final report on the Principles for Financial Market Infrastructures, the consultative document for the Disclosure Framework, and the consultative document for the Assessment Methodology are available at http://www.bis.org/publ/cpss101.htm and http://www.iosco.org/library/pubdocs/pdf/IOSCOPD377.pdf.
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