The Bank of Canada today published final supplementary guidance related to its Risk-Management Standards for Systemic Financial Market Infrastructures (FMIs) following a public consultation process.

The Risk-Management Standards for Systemic FMIs fully incorporate the Principles and Key Considerations articulated in the Principles for Financial Market Infrastructures (PFMIs). The PFMIs are international standards related to the risk-management, efficiency and transparency of systemically-important FMIs, introduced and published by the Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO).

The Bank of Canada has been developing supplementary guidance in support of its Risk-Management Standards for Systemic FMIs in coordination with the Canadian Securities Administrators (CSA) to provide additional context and clarity on certain aspects of these standards in the Canadian context.

The supplementary guidance that is being finalized today pertains to the following risk-management standards:

  • Standard 2: Governance
  • Standard 5: Collateral
  • Standard 7: Liquidity Risk
  • Standard 15: General Business Risk
  • Standard 23: Disclosure of Rules, Key Procedures and Market Data
  • Standard 24: Recovery Plans

Updates made today to Standards 2, 5, 7, 15 and 23 are not material; rather, they are intended to simplify and enhance consistency among all the supplementary guidance in support of these standards.

The guidance on Standard 24 published today was the subject of a public consultation that ran from 3 December 2015 to 1 February 2016, conducted in parallel with a CSA consultation on its related Companion Policy 24-102. The guidance on Standard 24 has been influenced by the comments received through the public consultation, the evolving international interpretations of the standards and guidance on FMI recovery planning set out in the PFMIs and the October 2014 CPMI-IOSCO report Recovery of financial market infrastructures, and ongoing international policy work related to FMIs and financial stability.

Developments in these areas are having, and will continue to have, an impact on FMI recovery planning and resolution frameworks. To ensure that recovery planning in the Canadian context remains in step with this evolving landscape, the Bank of Canada and the CSA have relaxed some of the previously restrictive language of the guidance on Standard 24 and made other non-material updates. The principles-based approach of the guidance, in particular its strong emphasis on systemic stability, has not changed and is reinforced by the adjustments made.

The Bank of Canada is grateful for the helpful comments that were provided from a variety of stakeholders during the consultation period.

Effective Dates

The designated systemic FMIs are expected to already be in observance of the Bank of Canada’s Risk-Management Standards for Systemic FMIs, with the exception of following standards, which have an effective date of 31 December 2016:

  • Standard 14: Segregation and Portability
  • Standard 19: Tiered Participation Arrangements
  • Standard 24: Recovery Plans

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