The World Federation of Exchanges (WFE) has responded to a consultation from the Financial Stability Board (FSB) related to the Continuity of Access to Financial Market Infrastructures (FMIs) for a Firm in Resolution.
Whilst focused on situations where a firm is in resolution, the FSB’s consultation concentrated on a number of requirements for FMI service providers, such as central counterparties (CCPs), therefore the WFE has responded on behalf of its membership.
Overall, the WFE in a statement explained that it supports the initiative of the FSB to encourage FMIs to maintain access for firms in resolution, where practical.
“Indeed, in some cases, continued access by the firm to the FMI may be beneficial to the CCP, or at least enable a smoother transition”.
The WFE’s response can be split into three broad categories, and summarised as follows:
1. Roles and responsibilities
Firms in resolution should retain access to critical FMI services, if certain safeguards are met.
An FMI should not, however, be coerced into facilitating access for a firm in resolution, if that might compromise its statutory obligations.
An FMI should also not be tasked with ensuring the safety and efficiency of its own market as well as one of its participants simultaneously.
2. Sharing of information
Where appropriate, relevant authorities should share information with the FMI provider, and FMIs should also be privy to the contingency plans produced by participant firms.
3. Scope
Third party providers of services relating to clearing, payment, securities settlement and custody activities – such as middleware IT services – should also be included within the scope, to ensure a level playing field with FMIs, FMI intermediaries and participants.
