The Bank of England (BoE) has published the first annual report on its supervision of financial market infrastructures (FMIs). The publication gives an overview of the bank’s regulatory work following the implementation of the Financial Services and Markets Act 2023 (FSMA 2023), which granted the BoE “new rule-making powers for CCPs and CSDs”.
A successor of FSMA 2000, FSMA 2023 is the new regulatory framework was put in place following Brexit to allow the BoE to replace EU laws with its own rules regarding the regulation of UK FMIs. The framework has two objectives; the primary one being to protect and enhance financial stability through the supervision of FMIs, and the secondary one, to facilitate innovation in the provision of CCP and CSD services.
Present and future
The report covers the BoE’s approach to the supervision of FMIs including its application of the FSMA 2023 framework, as well as the bank’s policy focus over the reporting period, including initiatives such as the CCP Supervisory Stress Test and the Digital Securities Sandbox (DSS). The paper also has a section on the bank’s future priorities and an annex of the FMIs and service providers under its supervision.
In the report’s forward, Sarah Breeden, deputy governor of financial stability at the BoE states that the bank’s aim is “to ensure that FMI regulation remains consistent with international standards, evolves as necessary, and supports our (the BoE’s) supervisory approach”. Looking ahead, the central bank wants to work to encourage FMIs to “proactively consider how their actions impact the broader financial system and so financial stability”.
