The Significance of the PFMIs

This is the second in a series of articles on PFMIs.

In response to the Global Financial Crisis of 2007-2009, the G20 countries developed a series of public policy initiatives in order to reorder and de-risk the world’s financial system. As initially announced in the 2009 Pittsburgh Declaration by the heads of those 20 governments, a key element focused on solidifying post-trade market infrastructures, themselves a central focus of Thomas Murray’s work since the company’s founding in 1994.

It must be noted that financial market infrastructures functioned well throughout that crisis; the attention given to them by G20, and the Financial Stability Board which serves as its central secretariat, was largely focused on making them more professional, and giving them rigorous global standards in the form of common principles. The back and middle office came forward into the light of public view for the first time. The systems and ways of working, which had usually been cobbled together to meet historic needs in different market contexts, have been given a similar direction for their development. There was a first true sense of global commonality.

Drafting for the Principles of Financial Markets Infrastructures began in 2011, with Thomas Murray an active party in commenting on the public texts. In April 2012, CPMI-IOSCO published the final result, a set of 24 high-level principles which set minimum recommended standards for the operations of central securities depositories (CSDs), securities settlement systems (SSSs), central counterparties (CCPs), payment systems (PSs), and trade repositories (TRs). FMIs are expected to undertake self-assessments to gauge their level of observance of the PFMIs every two years, or when proposing important new services, changes to risk controls, or when other material changes are made to their IT systems or operating environment.

Critically, the central bankers’ organization, the Bank for International Settlements’ Committee on Payments and Markets Infrastructures (CPMI) joined the capital markets authorities’ global association, the International Organization of Securities Commissions (IOSCO) to oversee these global standards. Their collaboration was unprecedented in its extent, and all the more effective for it, in recognition of the banks’ growing immersion in capital markets activities. CPMI-IOSCO as a joint force was given meaning and effect.

Five years on, these are no longer early days: many of the FMIs have not been meeting this public commitment to share their self-assessments with the market, and to make them easily accessible for investors as well as the oversight bodies in their jurisdictions. Conducting the self-assessments is expensive in time and resources, and many smaller market FMIs struggle to complete the exercise. Although over 50% (see below) of FMIs have concluded and published their self-assessments, many more have completed them but keep them unpublished for various reasons. Some have chosen not to publish until identified gaps have been remediated, which is hardly in the spirit of transparency of risks promoted by the principles. The intention of the G20, was to instil some discipline; competition, pride, and legal and regulatory obligations between markets to move the infrastructures ahead. However, because local regulators have applied the principles to varying degrees within their markets, we have the adoption of common standards being accomplished at different speeds from rapid, all the way down to a slow creep.

Admirably, the authorities took a further step that may not have been anticipated at the outset by observers: they have begun to establish travelling bands of central bankers and capital markets authorities to review these self-assessments. These reports are published as part of the World Bank-IMF Financial Stability Assessment Programme (FSAP) as well as separately through a CPMI-IOSCO monitoring programme. However, FSAP visits to a country occur only every few years and the PFMI monitoring programme is limited to only 28 jurisdictions. Hence, achieving a full picture of the state of play across all FMIs in all jurisdictions is difficult.

Thomas Murray and the CPMI-IOSCO PFMIs

The firm has multiple involvements:

  • TMDS engages with CPMI and IOSCO in person to review its work on infrastructures, and some of its findings in the field; and also how in its view many FMIs are adopting these standards and moving forward to meet the Principles;
  • TMDS works with infrastructures directly, offering them assistance in assessing their operations against the PFMIs. It is not a straightforward business, meeting often hard-to-calculate levels of observance in a qualitative environment. TMDS also gives recommended remedies to its clients; and
  • TMDS has begun to contact FMIs directly, and will continue to do so on a regular basis, to monitor how they are advancing in this global effort. The firm considers that its global expertise is especially strong in this regard, and is therefore able to promote business development of FMIs as they go forward to achieve full observance of these Principles.

TMDS has launched the PFMI Implementation Matrix (PIM) that displays the current status of the assessment of each of the 355 FMI’s within the 103 markets that TMDS currently monitors. The data below are based on current responses from 105 of 140 CSDs, 69 of 81 CCPs, 59 of 113 Payment Systems and 7 of 21 Trade repositories. The information was gathered in June 2017. Not all have done their homework yet, or have updated earlier work as is their obligation.


PFMI Implementation Matrix (PIM) presenting information on the 104 marketplaces surveyed by TMDS, from A-Z

Click here for a full size PDF Matrix.

PFMI Matrix

TMDS will continue to update and publish these tables on a quarterly basis, and provide to readers commentary on its own work in enabling infrastructures to advance as solid businesses central to their countries’ economies.


The author, Thomas Krantz, is Senior Advisor, Capital markets, in the firm of Thomas Murray; and served as Secretary General of the World Federation of Exchanges (2000-2012). The views expressed are his own, and not necessarily those of the firm.

Tags: CPMI-IOSCOG20Principles for Financial Markets InfrastructuresPFMIderivativesCentral Securities DepositoriesCSDCentral CounterpartyCCPTrade RepositoriesTRsecurities settlement systemsSSSpayment systemsPSFMIpost-trade risk managementinfrastructure risk assessmentscentral bank payments systems