The Bank of England (BoE) recently released two publications related to the oversight of financial market infrastructures (FMIs) – a document setting out its supervisory approach and a consultation paper on the fundamental rules for FMIs. These publications represent “a significant milestone in the Bank’s regulatory regime”, underpinned by the Financial Services and Markets Act 2023 (FSMA 2023). As the successor of the FSMA 2000, FSMA 2023 is the new statutory regulatory framework for UK FMIs that enables the BoE to “replace retained EU law with its own rules”.
Through the FSMA 2023, the BoE has been given “greater powers in its role as the UK’s regulator for CCPs and CSDs, matched by new accountability obligations”. It also has a secondary objective to “facilitate innovation when carrying out its FMI functions, subject to the primary financial stability objective being advanced”.
The consultation paper is the first step the BoE is taking, using its new powers, to make legally binding rules for UK CCPs and CSDs. The 10 fundamental rules proposed cover ethics, risk management, and operational resilience. The aim is to “clearly set the outcomes that the bank expects from FMIs, including their financial and operational resilience, and the actions they should take to understand and manage the risks they may pose to the broader system,” write the BoE.
The deadline for submitting responses is 19 February 2025.
