Principles of Financial Market Infrastructures (PFMIs)

SEBI/HO/MRD/MRD-PoD-3/P/CIR/2023/190 · 2023-12-19 · SEBI

Summary

This circular mandates that SEBI-regulated Clearing Corporations and Depositories, classified as Financial Market Infrastructures (FMIs), must adopt the CPSS-IOSCO Principles for Financial Market Infrastructures (PFMIs). It defines various FMI types including Central Counterparties (CCPs), Central Securities Depositories (CSDs), Securities Settlement Systems (SSS), Payment and Settlement Systems (PSS), and Trade Repositories (TRs). The document outlines a framework where FMIs conduct periodic self-assessments of 24 PFMIs, classifying them as quantitative or qualitative based on their applicability to specific entity types. This section defines the periodicity for self-assessment and disclosure by Financial Market Infrastructures, distinguishing between quantitative and qualitative requirements. It mandates annual monitoring by the Regulatory Oversight Committee and specifies the circular's effective date while rescinding previous regulations. The text concludes with the legal basis for issuance and lists the Principles for Financial Market Infrastructures (PFMIs) covering organization, risk management, settlement, and operational standards. This section outlines principles 20 throu

Text

SEBI is committed for adoption and implementation of the CPSS-IOSCO Principles for Financial Market Infrastructures (FMIs) in its regulatory functions of oversight, supervision and governance of the key FMIs under its purview.

The Principles apply to systematically important FMI entities such as Central Counterparty (CCP), Central Securities Depository (CSD)/ Securities Settlement System (SSS), Payment and Settlement Systems (PSS) and Trade Repository (TR).

SEBI regulated Depositories and Clearing Corporations are FMIs... and shall be required to comply with the PFMIs specified by CPSS-IOSCO as applicable to them.

It has been decided that FMIs shall carry out self-assessment on a periodic basis against the PFMIs and disclose the same on their websites.

Principles 1 (Legal basis), 2 (Governance Framework), and 3 (Comprehensive management of risks) are classified as Qualitative and apply to both CCs and Depositories.

Principles 4 (Credit risk), 5 (Collateral), 6 (Margin), and 7 (Liquidity Risk) are classified as Quantitative and apply specifically to CCs.

Principles 8 (Settlement finality), 9 (Money settlements), and 10 (Physical deliveries) are classified as Qualitative and apply specifically to CCs.

Principle 11 (Central securities depositories) is classified as Qualitative and applies specifically to Depositories.

Principle 12 (Exchange-of-value settlement systems) is classified as Quantitative and applies specifically to CCs.

Principle 13 (Participant-default rules and procedures) is classified as Qualitative and applies to both CCs and Depositories.

Principle 14 (Segregation and portability) is classified as Quantitative and applies specifically to CCs.

Principle 15 (General business risk) is classified as Quantitative and applies to both CCs and Depositories.

Source: SecMarx — Principles of Financial Market Infrastructures (PFMIs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.