CPMI-IOSCO

Earlier this month, Euroclear UK & Ireland (EUI) issued a consultation to participants concerning their proposals to enhance the US dollar settlement arrangements in the CREST system, and make relevant changes to CREST documentation. Thomas Murray wholeheartedly supports these proposals.

This is the first in a series of four articles considering central bank payment systems self-assessments against the PFMIs.

Introduction and the Bank of England Example

In response to the financial crises of 2007-2009, at the behest of G20 governments, the Financial Stability Board and its constituent bodies developed broad global standards to shore up a system that had proven all too fragile – though it must be said that the public, regulated marketplaces did function throughout (except in isolated cases where for a few days their governments closed them for fear of collapsing prices). The same cannot be said of the freezing up of the far larger OTC and banks’ market operations in that period, which was the source of the economic and social damage inflicted.

Trade reporting was a central tenet to the G20 response to the post-2007 global financial crises. Counterparties to OTC derivatives transactions would need to report data on the trades to a regulatory approved trade repository, which would offer regulators previously impossible transparency into a market that was widely blamed, or at least linked to, the global financial crises.

The time, money and effort diverted to re-regulation of the financial services industry since 2008 has dismayed bankers everywhere. But it has caused a special brand of irritation on a continent which made no contribution to the financial crisis, and whose main priority is not to tame excesses but to build capital markets attractive to foreign portfolio investors.

The mandatory clearing space is developing quickly in the post-crises environment. Alex Harborne looks at the space in more detail.