By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The International Organisation of Securities Commissions (IOSCO) Friday published responses to the Committee on Payment and Settlement Systems (CPSS) and IOSCO’s consultative document on the assessment methodology for the oversight expectations applicable to critical services providers (CSPs) which was published on December 18, 2013.
In about 12 responses provided, users of financial market infrastructures (FMIs) were of divergent views on both the assessment methodology and the guidance for authorities in assessing an FMI’s CSPs.
According to the association of German Banks, the questions raised in the document are appropriate and exhaustive, in their view, and they assume that responses will primarily be submitted by FMIs.
While Chris Barnard of the CPSS, bank of international settlement said the assessment methodology provides a comprehensive framework for assessing and monitoring a CSPs observance and compliance with each of the five (5) oversight expectations applicable to critical service providers.
‘’This should help to improve confidence in financial market infrastructures and financial markets generally, promote market integrity and increase regulatory transparency, comparability and consistency across jurisdictions’’ he said.
While the London Stock Exchange Group Plc (LSEG) in its response stresses the need to provide a more specific definition of critical service providers and clarify how instances of non-cooperation of the critical service providers should be addressed particularly where there may not be an alternative service provider that the FMI could engage for these purposes.
The LSEG also suggests that the assessment methodology be expanded to cover financial stability and people risk of the service provider. ‘’Finally, it provides some specific suggestions on QE1 ‘Risk identification and management,’’ the LSEG said’.
On the part of Thomas Murray, it said in contrast to the historic local development infrastructures with all their particularities, IOSCO’s work for nearly four (4) decades has introduced elements of commonality and standardisation of the world’s regulated marketplace.
‘’ This has given essential assistance to the infrastructure as they adapt to their clients rapid growth in cross border investment flows. The standards and principle, together with the multilateral memorandum of understanding amongst IOSCO members, are indispensible if the world truly is to get fair, regulated global markets,’’ Thomas Murray said.
Thomas Murray further affirmed that it accepts the validity of the regulators dilemma on topic: ‘’outsourcing critical services does change the nature of institutional vulnerability and risk, so how should the market overseers go about assuring that all will work as expected? Thomas Murray appreciates the CPSS-IOSCO objective of shoring up potential weakness in infrastructure when they have recourse to outsourcing for reasons of efficiency,’’ it said.
