ECSDA response to the CPMI-IOSCO consultation on FMIs’ management of general business risks and general business losses
- Clarifies scope and interactions with other risk families and with existing EU law under CSDR, notably RTS (EU) 2017/390 (prudential requirements) and RTS (EU) 2017/392 (authorisation, supervisory and operational requirements).
- Maintains flexibility in tools, focusing on identification and governance of GBR and not prescribing specific measurement models, vendor tooling, or external assurance that could be disproportionate for CSDs.
- Adjusts transparency, ensuring disclosures are on a legitimate “need-to-know” basis and do not require publication of commercially sensitive information or routine notice of minor technical changes.
- Calibrates LNAFE expectations to recognise (i) the low-frequency/high-impact-nature of certain shocks, (ii) the existing EU CSDR prudential requirements, recovery and winddown frameworks, and (iii) that capital should not be duplicated for the going concern, ‘business as usual’ risk management and recovery and orderly wind-down phases.
ECSDA welcomes CPMI-IOSCO’s aim to clarify expectations under PFMI Principle 15 and improve consistency in how FMIs address General Business Risk (GBR). We support guidance that supplements rather than reopens the PFMI and that remains outcomes-based, proportionate, and technology-neutral.
In that context, we particularly highlight that European CSDs already operate under a stringent, detailed CSDR prudential and operational framework specified in the technical standards. Although we may not expect other jurisdictions to fully endorse the European approach as applicable to all other regions through the international guidance, the clarity and accuracy of the relevant European provisions for CSDs should serve as an example of a high-quality implementation of the international guidance. The final guidance should pursue high-level international alignment and aspire for further clarity, providing regional flexibility rather than imposing parallel, potentially conflicting obligations.
We suggest that the final guidance: