Principles of Financial Market Infrastructures (PFMIs)
Summary
The Securities and Exchange Board of India (SEBI) issues this circular to mandate the adoption of the Principles for Financial Market Infrastructures (PFMIs) by regulated entities. It defines various types of Financial Market Infrastructures, including Central Counterparties, Depositories, and Trade Repositories, highlighting their systemic importance. The document establishes that SEBI-regulated FMIs must comply with these international standards to ensure market safety and efficiency. This section presents Annexure 1, which outlines the Principles for Financial Market Infrastructures (FMIs) covering legal basis, governance, risk management, and operational standards. It details twenty-four specific principles ranging from credit and liquidity risk to default management, access requirements, and transparency obligations. The document concludes with Annexure 2, listing specific Indian Clearing Corporations and Depositories.
Text
CPSS and IOSCO published the Principles for financial market infrastructures (PFMIs) on April 2012 to replace existing international standards.
The PFMIs comprise 24 principles designed to ensure that infrastructure supporting global financial markets is robust and well placed to withstand financial shocks.
Full, timely and consistent implementation of the PFMIs is fundamental to ensuring the safety, soundness and efficiency of key FMIs.
The Principles apply to systematically important financial market infrastructures entities such as CCP, CSD/SSS, Payment and Settlement systems, and TR.
Different categories of FMIs identified under PFMIs include Payment Systems, Central Securities Depositories, Securities Settlement Systems, Central Counterparties, and Trade Repositories.
All CPSS and IOSCO members are required to strive to adopt the PFMIs and implement them in their respective jurisdictions.
SEBI as a member of IOSCO is committed to the adoption and implementation of the new CPSS-IOSCO standards of PFMIs in its regulatory functions.
Depositories and Clearing Corporations regulated by SEBI are FMIs... and shall hence be required to comply with the principles of financial market infrastructures specified by CPSS-IOSCO.
All FMIs in the securities market shall be monitored and assessed against the PFMIs on a periodic basis.
This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992.
An FMI should have a well-founded, clear, transparent, and enforceable legal basis for each material aspect of its activities in all relevant jurisdictions.
An FMI should have governance arrangements that are clear and transparent, promote the safety and efficiency of the FMI, and support the stability of the broader financial system.
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Source: SecMarx — Principles of Financial Market Infrastructures (PFMIs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.