The EU’s implementation of international standards for payment systems and central securities depositories is largely on track, but not without weaknesses. This is the conclusion of a new assessment by CPMI and IOSCO, published on 28 April.
The report, titled “Implementation monitoring of PFMI: Level 2 assessment report for the EU – PSs and CSDs / SSSs,” evaluates the extent to which EU legislation and oversight frameworks for systemically important payment systems (PSs) and central securities depositories/securities settlement systems (CSDs/SSSs) align with the Principles for Financial Market Infrastructures (PFMI). The review covers the framework as it stood in October 2019, and does not reflect later developments.
The assessment finds that the PFMI have been fully and consistently implemented for all principles relevant to systemically important payment systems. This includes areas such as governance, risk management, settlement, and operational resilience.
Gaps identified
The picture is more mixed when it comes to CSDs and securities settlement systems. While the legal, regulatory, and oversight arrangements in the EU are complete and consistent with most PFMI requirements, the assessment identifies several areas where implementation falls short. These include principles related to risk and governance, where frameworks were found to be only broadly or partly consistent, or, in some cases, not consistent at all.
Jurisdictional differences
Due to the structural separation of regulatory regimes across the EU, the review was broken down into three parts: systemically important PSs in the euro area, those in Sweden, and the EU-wide regime for CSDs/SSSs. Each was assessed independently to account for the varying legal environments.
The report follows a 2015 CPMI-IOSCO review of the EU’s implementation of PFMI for central counterparties and trade repositories.
