CPMI & IOSCO Issue Final Guidance on Financial Market Infrastructures’ Business Risks

Key Takeaways

• Final Guidance Published: CPMI and IOSCO have issued final guidance on how financial market infrastructures (FMIs) should manage general business risks and potential losses.
• Financial Resource Requirements: The guidance addresses how FMIs should determine the minimum amount of liquid net assets funded by equity needed to cover potential general business losses.
• Governance and Transparency: The report provides further direction on risk identification, monitoring, oversight, and transparency, including considerations for recovery and orderly wind-down.
• Implementation Issues Identified: The guidance follows a Level 3 assessment that identified shortcomings in the implementation of Principle 15 of the Principles for Financial Market Infrastructures.
• Existing Standards Clarified: The report supplements existing international standards without introducing additional requirements, providing FMIs and supervisory authorities with further guidance on their application.

Deep Dive

Financial market infrastructures are expected to maintain sufficient equity-backed liquid assets to withstand losses arising from their business operations. An international assessment found problems with how some of those institutions were applying that requirement, prompting further work by two of the financial system's principal standard-setting bodies.

The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published final guidance addressing the management of general business risks and the financial resources held against potential losses.

The report supplements the Principles for Financial Market Infrastructures (PFMI), the international standards governing institutions responsible for essential financial market functions, including clearing, settlement, and transaction recording.

Its focus is Principle 15, which requires FMIs to identify, monitor, and manage general business risks and maintain sufficient liquid net assets funded by equity to cover potential losses.

These losses are distinct from those arising from a participant's default or from exposures separately covered under the PFMI's credit and liquidity risk principles. They can arise from the administration and operation of an FMI as a business enterprise.

That leaves FMIs with financial exposures beyond those directly associated with the transactions they process. Their ability to absorb such losses is particularly important when financial difficulties threaten their continued operation.

Financial Resources and Oversight

The final guidance addresses how FMIs should identify, monitor, and manage general business risks, including how they determine the minimum amount of liquid net assets funded by equity needed to cover potential losses. It also examines governance and transparency arrangements, along with the treatment of general business risks in recovery and orderly wind-down planning.

The amount and availability of these financial resources are central to Principle 15. An FMI facing substantial business losses must have resources available to absorb them, including in circumstances where it may need to recover from financial distress or wind down its operations.

CPMI and IOSCO also clarify how general business risk relates to other principles within the PFMI framework, an issue that bears on how FMIs distinguish between different sources of potential losses and the resources maintained against them.

The guidance does not establish additional international standards. Instead, it describes an acceptable approach to meeting existing PFMI expectations while acknowledging that other approaches may also satisfy those principles.

Earlier Assessment Prompted Further Work

The final report follows a consultation published in November 2025 and draws on a Level 3 assessment of Principle 15 implementation. That assessment identified issues involving the management of general business risks and the liquid net assets funded by equity that FMIs maintain against potential losses.

CPMI and IOSCO considered the assessment findings alongside responses to the consultation and earlier work examining how central counterparties address losses unrelated to participant defaults.

The resulting guidance is intended for FMIs and the authorities responsible for their regulation, supervision, and oversight. The standard-setting bodies have called on institutions and their relevant authorities to consider the guidance carefully when determining how to observe the PFMI.

The publication completes the consultation process and gives supervisors and FMI operators a more detailed reference for applying Principle 15. Its practical significance will depend on how individual institutions and their authorities incorporate that guidance into existing risk management, financial resource, and governance arrangements.

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