On 19 November 2024, the Bank of England (BoE) published a consultation paper (CP) setting out proposals to introduce a set of Fundamental Rules for financial market infrastructures (FMIs), which it says are essential to the smooth and safe operation of the UK financial system and broader economy. Alongside the CP, the BoE also published a document setting out its approach to FMI supervision.

The CP

The CP is the BoE’s first use of its new power to make legally binding rules for UK central counterparties (CCPs) and central securities depositories (CSDs). The proposed rules will also apply to BoE-regulated UK payments systems and specified service providers.

The aim of the proposed rules is to increase the transparency and effectiveness of the BoE’s role in supervising FMIs, by clearly setting out the outcomes that the BoE 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. The intention is that this will support FMIs’ compliance with the relevant regulatory regime and their supervisory engagement with the BoE, and consequently UK financial stability.

The proposed Fundamental Rules are intended to be complementary to the existing relevant regulatory frameworks for FMIs. The form of the Fundamental Rules will differ depending on the type of firm; for example:

  • For CCPs and CSDs, they will be rules made under Financial Services and Markets Act 2000 (FSMA 2000).
  • For recognised payment service operators and specified service providers, they will take the form of a binding Code of Practice (CoP), pursuant to the powers given to the BoE under Part 5 of Banking Act 2009.
  • The BoE also intends to apply the Fundamental Rules to systemic stablecoins, alongside the existing payments CoPs, in due course – it notes that it is continuing to develop its approach to a systemic stablecoin regime following its November 2023 discussion paper.

The deadline for responses to the CP is 19 February 2025. The BoE plans to engage with stakeholders during the consultation period to gather a range of views on its proposals.

The supervisory approach document

The supervisory approach document sets out how the BoE will fulfil its role of supervising FMIs in practice. By providing this additional clarity, the BoE aims to help effective supervision by ensuring FMIs have a clear understanding of what it is seeking to achieve. The BoE notes that the supervisory approach will continue to evolve and that it will periodically update its approach to reflect its priorities and any new developments.

The BoE intends to engage with stakeholders in relation to the supervisory approach document in Q1 2025.