FMis

Financial market infrastructures (FMIs) are multilateral systems that enable the clearing, settlement, and recording of monetary financial transactions. They reduce settlement risk and underpin the functioning of modern financial markets. FMIs include payments systems, central securities depositories, securities settlement systems, central counterparties, and trade repositories, as well as related clearing and settlement mechanisms.

Payments systems provide the final settlement of interbank transfers, often through real-time gross settlement. Securities settlement systems manage the transfer of securities ownership and the delivery-versus-payment processes. Central counterparties interpose themselves between buyers and sellers to guarantee trades and manage credit risk, while central securities depositories hold securities and facilitate book-entry transfers. Trade repositories record derivatives trades to enhance transparency.

FMIs rely on robust governance, risk management, and operational resilience. They use settlement finality, multilateral netting, collateral, margining, and default waterfalls to control risk. Oversight authorities supervise FMIs, require testing, recovery and resolution planning, and promote continuity of critical services.

Global standards for FMIs are provided by the Principles for Financial Market Infrastructures (PFMI), developed by the CPMI (Bank for International Settlements) and IOSCO. PFMI cover legal frameworks, governance, credit and liquidity risk management, disclosure, and operational risk. They guide national regulations and cross-border cooperation and are designed to strengthen resilience and mitigate systemic risk.

The functioning of FMIs is central to monetary policy transmission, market liquidity, and financial stability. Ongoing reforms address cyber resilience, cross-border interoperability, and consistent oversight across jurisdictions.