On 19 November 2024, the BoE published a consultation paper on introducing fundamental rules for certain FMIs.
The BoE has proposed new fundamental rules that will apply to certain FMIs in the UK, including CCPs, CSDs, RPSOs, and SSPs. These rules are designed to provide a high-level set of overarching requirements that will serve as the basis for regulating these FMIs, filling in gaps where no specific BoE rules exist. The aim is to clearly outline the outcomes expected by the BoE, focusing on aspects such as skill, care, diligence, transparency with regulators, operational risk, and financial stability risk management.
The rules are detailed in draft documents, including a Code of Practice for RPSOs and SSPs under the Banking Act 2009, and a set of rules for CCPs and CSDs under the Financial Services and Markets Act 2000 (FSMA). Additionally, the BoE is consulting on a draft supervisory statement regarding these rules, with a consultation period ending on 19 February 2025. There will be a six-month period for implementation.
These fundamental rules are part of the BoE's broader strategy to develop a comprehensive rulebook for FMIs, leveraging new rulemaking powers to replace existing detailed requirements in UK legislation. The BoE also plans to extend these rules to cover systemic stablecoins in the future.
The BoE has also published an updated version of its approach to FMI supervision. It has revised its supervision approach for FMIs, including CCPs, CSDs, and RPSOs. This update outlines the BoE's objectives, legislative framework, and four guiding principles for FMI supervision: judgement-based, forward-looking, risk-focused, and proportionate. It details the BoE's risk assessment model, categorisation of FMIs by systemic impact, and the practical aspects of supervision, including tools and enforcement powers. The approach also considers the specific supervision needs of non-UK FMIs to ensure proportionality. This new version replaces the April 2013 document and the supervision strategy for service providers to recognised payment systems from the BoE's February 2018 report.
Separately, on 18 December 2024, the BoE published the 2024 annual report on its supervision of FMIs, highlighting its priorities for the future, focusing on creating a rulebook for FMIs, maintaining stringent supervision, and fostering international cooperation.
