The Committee on Payments and Market Infrastructures and the International Organisation of Securities Commissions (CPSS-IOSCO) has published a report entitled Recovery of financial market infrastructures (the Report).

The purpose of the Report is to provide guidance for financial market infrastructures (FMIs) and authorities on the development of recovery plans. The Report is not intended to create additional standards beyond those set out in the CPSS-IOSCO Principles for financial market infrastructures (the PFMI) but rather are designed to provide supplemental guidance on, and a menu of tools for, observance of the PFMI.

The Report provides guidance on both the recovery planning process and the content of recovery plans. It provides an overview of some of the tools that an FMI may include in its recovery plan, including a discussion of scenarios that may trigger the use of recovery tools and the characteristics of appropriate recovery tools in the context of such scenarios. The Report considers recovery tools that fall into five categories:

  • tools to allocate uncovered losses caused by participant default;
  • tools to address uncovered liquidity shortfalls;
  • tools to replenish financial resources;
  • tools for a central counterparty to re-establish a matched book; and
  • tools to allocate losses not related to participant default.

View CPMI and IOSCO issue report on the recovery of financial market infrastructures, 15 October 2014