Trading session at NSE
The Committee on Payment and Settlement Systems (CPSS) and the International Organisation of Securities Commissions (IOSCO), have hinted of plans to regulate and create a benchmark for Financial Market Infrastructures (FMI), in financial systems across the world.
Both organisations in a statement signed by the spokesperson of IOSCO, Carla Vitzthum, said the regulation and benchmark would ensure that systemic disruption were resolved without systemic disruption or exposing the taxpayer to loss.
According to them, “To achieve this in the context of FMIs, relevant authorities must have powers to maintain an FMI’s critical services. Accordingly, all types of FMIs should generally be subject to regimes and strategies for recovery and resolution.
“An effective resolution regime must enable resolution without systemic disruption or exposing the taxpayer to loss. To achieve this in the context of FMIs, relevant authorities must have powers to maintain an FMI’s critical services.”
The IOSCO spokesman stated that financial market infrastructures play an essential role in the global financial system, adding that the disorderly failure of an FMI can lead to severe systemic disruption if it causes markets to cease to operate effectively.
Vitzthum reiterated that the CPSS -IOSCO Principles for financial market infrastructures published in April 2012 require that FMIs have effective strategies, rules and procedures to enable them to recover from financial stresses.
She also noted that the Financial Stability Board’s Key Attributes of Effective Resolution Regimes for Financial Institutions, published in 2011 further require that jurisdictions establish resolution regimes to allow for the resolution of a financial institution in circumstances where recovery is no longer feasible.
The Nigerian Stock Exchange, NSE, had last week experienced an almost similar problem, recording a complex technical hitch in its trading infrastructure, a development which led to a disruption in trading.
Commenting further, Vitzthum said CPSS and IOSCO had published for public comment, a consultative report on the recovery and resolution of financial market infrastructures.