National Settlement Depository (NSD), Russia’s central securities depository, has completed the annual assessment of its compliance with the CPMI-IOSCO Principles for Financial Market Infrastructures (PFMIs). Compared with the previous year’s assessment, improvements were reported in NSD’s observance of three principles (“Money Settlements,” “Custody and Investment Risk” and “Tiered Participation Arrangements”). The level of observance of the remaining principles remained unchanged. FMIs are expected to undertake regular self-assessments in order to establish their degree of observance of the PFMIs, using the Assessment Methodology and Disclosure Framework associated to the PFMIs.
The results of the analysis show that NSD is “broadly” observant of the PFMIs. Of the 24 principles, NSD “fully” observes 14, “broadly” observes 6, and there are 4 principles not applicable to NSD’s operations. There are no principles that NSD does not observe.
In accordance with the recommendations made by the Committee on Payment and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO), as well as by the Bank of Russia, NSD regularly assesses the level of compliance of its operations with the requirements and recommendations set out in the PFMIs, and discloses the results on its website.
In 2016, the Bank for International Settlements (BIS) assigned the highest rating to the Russian financial market infrastructure according to the results of the monitoring of the formation of legislative framework for developed and emerging financial markets. Russia’s FMI received the 4th level rating (highest possible) alongside with FMIs of Germany, France, Great Britain, Hong Kong, Singapore, etc.
The BIS monitoring includes a thorough analysis of the legislative framework for the Russian CSD’s, repositories’, and central counterparties’ operations, allowing the national market to observe the CPMI-IOSCO Principles for Financial Market Infrastructures.
Financial market infrastructures (FMIs) that facilitate the clearing, settlement, and recording of monetary and other financial transactions play a critical role in fostering financial stability. However, if not properly managed, they can pose significant risks to the financial system and be a potential source of contagion, particularly in periods of market stress. Although FMIs performed well during the recent financial crisis, events highlighted important lessons for effective risk management. These lessons, along with the experience of implementing the existing international standards, led the Committee on Payment and Market Infrastructures (CPMI) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) to review and update the standards for FMIs. All CPMI and IOSCO members intend to adopt and apply the updated standards to the relevant FMIs in their jurisdictions to the fullest extent possible.
In April 2012, the Bank for International Settlements and the International Organization of Securities Commissions published the CPMI-IOSCO Principles for Financial Market Infrastructures focused on establishing efficient internal procedures for maintaining financial stability, business continuity, and the appropriate level of FMI risk management, corresponding with the interests of owners, participants, clients and employees of the FMI.
The Committee on Payment and Market Infrastructures (CPMI) is a part of the Bank for International Settlements. The CPMI is a standard setting body for payment, clearing and securities settlement systems. It also serves as a forum for central banks to monitor and analyze developments in domestic payment, clearing and settlement systems as well as in cross-border and multicurrency settlement schemes.
The International Organization of Securities Commissions (IOSCO) develops, implements, and promotes adherence to internationally recognized standards for securities regulation, and is working intensively with the G20 and the Financial Stability Board on the global regulatory reform agenda. IOSCO’s membership regulates more than 95% of the world’s securities markets.