On 18 December 2023, the Bank of England (BoE) published its supervision of financial market infrastructures (FMIs) annual report for 2023.

The report highlights the crucial role of FMIs in the smooth operation of the UK financial system and the broader economy. It sets out how the BoE has exercised its responsibilities in respect of supervising FMIs since it published its last report in December 2022, and flags the important part played by the BoE’s supervision in delivering financial stability, by ensuring that the FMIs’ risk management and resilience frameworks enable them to carry out these essential functions in normal times and during times of stress. The report also notes the key activities that the BoE has undertaken to deliver against its primary objective of protecting and enhancing UK financial stability in three areas – ensuring FMIs’ financial resilience, ensuring their operational resilience and enabling safe innovation, with significant international engagement in support of all three.

In the report, the BoE also flags the significant change that has taken place in 2023, with the new statutory framework for UK FMIs (set out in the Financial Services and Markets Act 2023) having been approved and relevant sections expected to commence in 2024. The BoE notes that this will, in practice, allow it to ensure that regulation for central counterparties and central securities depositories is responsive, remains consistent with the highest international standards, evolves in response to current events and supports its supervisory approach. The report sets out how the BoE is preparing for these new responsibilities.

Looking ahead, the report explains the BoE’s future priorities in the following areas:

  • Delivering robust, risk-based supervision of FMIs and enhancing the supervisory approach.
  • Enhancing FMI operational resilience.
  • Enhancing FMI financial resilience, recovery and resolution.
  • Facilitating safe innovation in payments, settlement and clearing.