The European Central Bank (ECB) has published its fourth Eurosystem oversight report. The report describes how the Eurosystem (i.e. the ECB and the national central banks of EU Member States that have adopted the euro) has exercised its oversight responsibilities and conducted oversight activities in the period from June 2014 to the end of 2016. The report also reflects on regulatory, policy, market and technical developments during that period which are relevant from an oversight perspective. In some cases, reference is also made to important activities and developments that took place in the first part of 2017.

The report is structured as follows:

• chapter 1 provides an overview of the Eurosystem’s oversight function: the institutional and legal framework and the respective oversight standards;
• chapter 2 elaborates on the oversight activities that the Eurosystem carried out under its various areas of responsibility during the reporting period;
• chapter 3 provides an outlook for the area of Eurosystem oversight for the period ahead; and
• chapter 4 concludes with a set of special articles on topics relevant to Eurosystem oversight.

In terms of further work priorities, the report notes the following:

• the Eurosystem will continue to focus on the financial and operational resilience of financial market infrastructures (FMIs) and payment instruments. Eurosystem central banks will work together with FMI operators and relevant authorities for payment instruments to ensure that infringements identified and/or recommendations issued in the context of oversight assessments will be addressed in an appropriate manner and in due time to preserve the safety and efficiency of the underlying systems and instruments;
• cyber threats posed to all FMIs and payment instruments, as well as financial markets and their participants more generally, will remain at the core of the Eurosystem agenda in the coming years. In this context, cooperation with other authorities and system operators will be deepened and enhanced in order to continue to work together against this evolving and borderless threat;
• the ECB expects work to revise the Target2-Securities (TS2) oversight framework to be completed before the end of 2017 and a more comprehensive assessment of TS2 to be launched in 2018;
• authorisation under the Regulation on improving securities settlement and regulating central securities depositories (CSDR) will be the main focus of the Eurosystem’s work relating to securities settlement system and CSDs. The ECB noted that although CSDs were obliged to apply for authorisation under the CSDR by 30 September 2017, the process is expected to take some time to complete; and
• in terms of the UK’s decision to leave the EU, the Eurosystem is assessing the implications of its departure for euro area FMIs, particularly from the perspective of the impact on UK-based participants in these infrastructures.

View ECB Eurosystem oversight report for 2016, 24 November 2017