Financial Stability Board Publishes Summary of Workshop on Continuity of Access to Financial Market Infrastructure08/28/2019The Financial Stability Board has published a summary of an industry workshop, held on May 21, 2019, on continuity of access to financial market infrastructures for firms in resolution. The FSB held the workshop to assist in its efforts to monitor implementation of the FSB Guidance on continuity of access to FMI for firms in resolution, published in July 2017. The Guidance provides for arrangements to allow continuity of access to FMIs for a global systemically important bank in resolution. The Guidance applies to FMIs as providers of clearing, payment, securities settlement and/or custody services, to G-SIBs and other banks that are subject to resolution (referred to here as firms) and recovery planning requirements, as well as the G-SIB resolution authorities and regulators of the FMIs.
The FSB's summary sets out the key experiences that were shared and discussed at the workshop and a list of action points to assist in implementation of the Guidance. Some of the experiences included in the summary are:
- The Novo Banco experience of seeking access to FMIs during a resolution, which highlighted the importance of planning ahead of a resolution, capacity for communicating with all stakeholders, including FMIs, readily available legal documentation, information on collateral and clear records of accounts.
- Noting the difference in approaches by different types of FMI, the firms discussed the importance for resolution planning of: (i) identifying and understanding dependencies on key FMIs; and (ii) understanding how FMIs would treat the firms in stress scenarios and what additional requirements they might impose, such as prefunding or collateral requirements and information requirements.
- The FMI participants noted that it would be helpful to streamline the process for providing information annually to their individual members and discussed their approaches to resolution, the provision of 'presumptive path' information and their information needs to ensure changes arising from a resolution could be implemented in a timeous manner.
- FMI intermediary firms noted that they were involved in the role of both FMI and FM service user. As the provider of FMI services, the intermediary firms highlighted that the challenges arising from having a large number of clients, often based in different jurisdictions with different applicable laws and from operating without a common rulebook, although standard contractual language might be useful.
The FSB states that it will consider how to progress the following action points emerging from the workshop:
- Developing common templates for collection of core information from FMIs by FMI types;
- Public disclosure by FMIs of certain information, including non-binding ‘presumptive path’ summaries of responses to a member experiencing distress or entering into resolution;
- Sharing relevant resolution contact information; and
- Discussions between FMIs and resolution authorities on resolution strategies and approaches, including communication needs.
View the FSB summary of the workshop.
View the FSB Guidance on continuity of access to FMIs.
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