The European Central Bank (ECB) has published an interview with Benoit Coeure (BC), Member of the Executive Board of the ECB and Chairman of the Committee on Payments and Market Infrastructure (CPMI). The interview focused on the implementation of the CPMI – International Organisation of Securities Commissions (IOSCO) Principles for Financial Market Infrastructure (PFMI) and compliance by central counterparties (CCPs) with the recovery guidance released in 2014 by the CPMI-IOSCO.

BC states that the CPMI-IOSCO sent a series of questionnaires to several CCPs last year which covered both recovery planning and risk management practices more generally. The responses to the questionnaires have been reviewed and the ECB is working with the Financial Stability Board. The outcome of this work will appear in two “twin” reports that will be published in early summer.

The first report will review the implementation of the PFMI across 10 derivatives CCPs. The ECB is very positive about the work that has been conducted by CCPs but has identified shortcomings in certain areas including financial resources, liquidity resources and recovery planning.

The second report will provide additional guidance to support the implementation of both the PFMI and the recovery guidelines. There will be a public consultation process on the second report following which final guidance is expected to be published either later this year or in early 2017.

The second report is expected to include guidance on governance, financial resources and stress testing. It will also have further guidance on margining and, to some extent, on collateral management.

The second report will not be discussing resolution as this is being covered by the Financial Stability Board (FSB). BC states that the FSB will come up with its own guidance on resolution later this year.

View ECB Executive Board Member outlines future work on compliance with PFMIs, 19 May 2016