Settlement

PFMI 1: Legal basis

A CCP should have a well-founded, clear, transparent, and enforceable legal basis for each material aspect of its activities in all relevant jurisdictions.

  • PFMI 1.1
  • PFMI 1.2
  • PFMI 1.3
  • PFMI 1.4
  • PFMI 1.5
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PFMI 2: Governance

A CCP should have governance arrangements that are clear and transparent, promote the safety and efficiency of the CCP, and support the stability of the broader financial system, other relevant public interest considerations, and the objectives of relevant stakeholders.

  • PFMI 2.1
  • PFMI 2.2
  • PFMI 2.3
  • PFMI 2.4
  • PFMI 2.5
  • PFMI 2.6
  • PFMI 2.7
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PFMI 3: Framework for the comprehensive management of risks

A CCP should have a sound risk-management framework for comprehensively managing legal, credit, liquidity, operational, and other risks.

  • PFMI 3.1
  • PFMI 3.2
  • PFMI 3.3
  • PFMI 3.4
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PFMI 4: Credit risk

A CCP should measure, monitor, and manage its credit exposures to CPs and intermediaries & maintain sufficient resources to cover exposure to each or the two largest CPs with a high degree of confidence.

  • PFMI 4.1
  • PFMI 4.2
  • PFMI 4.4
  • PFMI 4.5
  • PFMI 4.6
  • PFMI 4.7
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PFMI 5: Collateral

A CCP that requires collateral to manage its or CP’s credit exposure should accept collateral with low credit, liquidity, and market risks. A CCP should also set and enforce appropriately conservative haircuts and concentration limits.

  • PFMI 5.1
  • PFMI 5.2
  • PFMI 5.3
  • PFMI 5.4
  • PFMI 5.5
  • PFMI 5.6
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PFMI 6: Margin

A CCP should cover its credit exposures to its participants for all products through an effective margin system that is risk-based and regularly reviewed.

  • PFMI 6.1
  • PFMI 6.2
  • PFMI 6.3
  • PFMI 6.4
  • PFMI 6.5
  • PFMI 6.6
  • PFMI 6.7
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PFMI 7: Liquidity risk

A CCP should measure, monitor, and manage its liquidity risk; maintain liquidity across currencies for same-day and, where appropriate, intraday and multi day settlement of obligations under a wide range of extreme but plausible market conditions.

  • PFMI 7.1
  • PFMI 7.2
  • PFMI 7.4
  • PFMI 7.5
  • PFMI 7.6
  • PFMI 7.7
  • PFMI 7.8
  • PFMI 7.9
  • PFMI 7.10
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PFMI 8: Settlement finality

A CCP should provide clear and certain final settlement, at a minimum by the end of the value date. Where necessary or preferable, a CCP should provide final settlement intraday or in real time.

  • PFMI 8.1
  • PFMI 8.2
  • PFMI 8.3
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PFMI 9: Money settlements

A CCP should conduct its money settlements in central bank money where practical and available. If central bank money is not used, a CCP should minimise and strictly control the credit and liquidity risk arising from the use of commercial bank money.

  • PFMI 9.1
  • PFMI 9.2
  • PFMI 9.3
  • PFMI 9.4
  • PFMI 9.5
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PFMI 10: Physical deliveries

A CCP should clearly state its obligations with respect to the delivery of physical instruments or commodities and should identify, monitor, and manage the risks associated with such physical deliveries.

  • PFMI 10.1
  • PFMI 10.2
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PFMI 11: Central securities depositories

A CSD should have appropriate rules and procedures to help ensure the integrity of securities issues and minimise and manage the risks associated with the safekeeping and transfer of securities. A CSD should maintain securities in an immobilised or dematerialised form for their transfer by book entry.

  • PFMI 11.1
  • PFMI 11.2
  • PFMI 11.3
  • PFMI 11.4
  • PFMI 11.5
  • PFMI 11.6
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PFMI 12: Exchange-of-value settlement systems

If an FMI settles transactions that involve the settlement of two linked obligations (e.g. securities or FX transactions), it should eliminate principal risk by conditioning the final settlement of one obligation upon the final settlement of the other.

  • PFMI 12.1
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PFMI 13: Participant-default rules and procedures

A CCP should have effective and clearly defined rules and procedures to manage a participant default. These rules and procedures should be designed to ensure that the CCP can take timely action to contain losses and liquidity pressures and continue to meet its obligations.

  • PFMI 13.1
  • PFMI 13.2
  • PFMI 13.3
  • PFMI 13.4
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PFMI 14: Segregation and portability

A CCP should have rules and procedures that enable the segregation and portability of positions of a participant’s customers and the collateral provided to the CCP with respect to those positions.

  • PFMI 14.1
  • PFMI 14.2
  • PFMI 14.3
  • PFMI 14.4
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PFMI 15: General business risk

A CCP should identify, monitor, and manage its general business risk and hold liquid net assets funded by equity to ensure a recovery or orderly wind-down of critical operations and services.

  • PFMI 15.1
  • PFMI 15.2
  • PFMI 15.3
  • PFMI 15.4
  • PFMI 15.5
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PFMI 16: Custody and investment risks

A CCP should safeguard its own and its participants’ assets and minimise the risk of loss on and delay in access to these assets. A CCP’s investments should be in instruments with minimal credit, market, and liquidity risks.

  • PFMI 16.1
  • PFMI 16.2
  • PFMI 16.3
  • PFMI 16.4
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PFMI 17: Operational risk

A CCP should identify the plausible sources of operational risk and mitigate their impact through the use of appropriate systems, policies, procedures, and controls. Systems should be designed to ensure a high degree of security and operational reliability and should have adequate, scalable capacity. Business continuity management should aim for timely recovery of operations and fulfilment of the CCP’s obligations, including in the event of a wide-scale or major disruption.

  • PFMI 17.1
  • PFMI 17.2
  • PFMI 17.3
  • PFMI 17.4
  • PFMI 17.5
  • PFMI 17.6
  • PFMI 17.7
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PFMI 18: Access and participation requirements

A CCP should have objective, risk-based, and publicly disclosed criteria for participation, which permit fair and open access.

  • PFMI 18.1
  • PFMI 18.2
  • PFMI 18.3
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PFMI 19: Tiered participation arrangements

A CCP should identify, monitor, and manage the material risks to the CCP arising from tiered participation arrangements.

  • PFMI 19.1
  • PFMI 19.2
  • PFMI 19.3
  • PFMI 19.4
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PFMI 20: FMI links

A CCP that establishes a link with one or more CCPs should identify, monitor, and manage link-related risks.

  • PFMI 20.1
  • PFMI 20.2
  • PFMI 20.3
  • PFMI 20.4
  • PFMI 20.5
  • PFMI 20.6
  • PFMI 20.7
  • PFMI 20.8
  • PFMI 20.9
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PFMI 21: Efficiency and effectiveness

A CCP should be efficient and effective in meeting the requirements of its participants and the markets it serves.

  • PFMI 21.1
  • PFMI 21.2
  • PFMI 21.3
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PFMI 22: Communication procedures and standards

A CCP should use, or at a minimum accommodate, relevant internationally accepted communication procedures and standards in order to facilitate efficient payment, clearing, settlement, and recording.

  • PFMI 22.1
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PFMI 23: Disclosure of rules, key procedures, and market data

A CCP must have clear, comprehensive, and publicly disclosed rules/procedures for CPs to have an accurate understanding of the risks, fees, and other material costs.

  • PFMI 23.1
  • PFMI 23.2
  • PFMI 23.3
  • PFMI 23.4
  • PFMI 23.5
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PFMI 24: Disclosure of market data by trade repositories

A TR should provide timely and accurate data to relevant authorities and the public in line with their respective needs.

  • PFMI 24.1
  • PFMI 24.2
  • PFMI 24.3
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