POST TRADE A CENTRAL BANK PERSPECTIVE

Transcription

1 POST TRADE A CENTRAL BANK PERSPECTIVE Knut Sandal, Norges Bank

2 Agenda The roles of Norges Bank Changes in regulation Changes in post trade landscape Oversight challenges 2

3 THE ROLES OF NORGES BANK 3

4 Our organisation EXECUTIVE BOARD Governor Deputy Governor General Counsel Director of Communication General Secretariat and Compliance Financial Stability Markets and Banking Services Monetary Policy Corporate and Shared Services Oversight unit Operational unit 4

5 Our roles Oversight responsibilities o o Norges Bank Act 1 - promote an efficient payment system in Norway and vis-à-vis other countries CPMI/IOSCO Principles for Financial Market Infrastructures (PFMI) Oversight activities o o o Oversight meetings Financial Infrastructure Report Consultations regarding new regulatory framework Settlement of cash leg o Norges Bank s settlement system NBO Other central bank functions 5

6 Cooperation with the FSA Avoid double regulatory burden on the FMIs Memo on cooperation keep each other informed and consult each other before important decisions affecting securities settlement systems and clearing houses are made Common PFMI-assessment in 2014 and

7 Assessment 2015 according to PFMI

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9 CHANGES IN REGULATION 9

10 International recommendations : International recommendations CPSS/IOSCO 2012: PFMI: Much more detailed and comprehensive principles EU regulations 1998: Directive on settlement finality in payment & securities settlement systems 2012: EMIR 2014: CSDR Through EMIR and CSDR large parts of PFMI become law. Delayed implementation in Norway. 10

11 CHANGES IN POST TRADE LANDSCAPE 11

12 Clearing of different instruments Exchange OTC Stocks Decided by market place Small volumes Derivatives Smaller volumes than OTC Large volumes & long maturities G20 s OTC - reform Soon mandatory clearing for some IRS 12

13 Market shares for some stock exchanges 100% 100% 90% 80% Oslo Stockholm London 90% 80% 70% 70% 60% 60% 50% 50% 40% % Source: BATS Chi-X Europe

14 Trading and clearing of stocks in NOK Trading Oslo Stock Exchange LSE Turquoise (London) BATS Chi-X Europe (London) Clearing SIX x-clear LCH EuroCCP

15 Trading, clearing and settlement of stocks in NOK Trading Oslo Stock Exchange LSE Turquoise (London) BATS Chi-X Europe (London) Clearing SIX x-clear LCH EuroCCP Settlement Private banks Securities settlement system VPS Cash leg Norges Bank

16 CSDs CSDR Delayed implementation in Norway More competition? T2S Norwegian NUG reestablished this autumn Norges Bank will consider participation if there is a market demand

17 OVERSIGHT CHALLENGES 17

18 International cooperation International FMIs fall under the scope of several authorities The authorities must cooperate more closely in order to o Not multiply the regulatory burden on the FMIs o Handle potential conflict of interests Arrangements for cooperation and info-sharing o MOU for CCP-colleges (EMIR) o MOU with Swiss authorities regarding SIX x-clear 18

19 CCPs CCPs aim to promote financial stability, but new challenges arise: Complex financial risk Concentration risk o Interoperability o Common members o Procylicality 19

20 Concentration risk 20

21 Interoperability stockclearing Trading Oslo Børs LSE Turquoise (London) BATS Chi-X Europe (London) Banks DNB UBS ABN DB Clearing SIX x-clear LCH EuroCCP 21

22 Common members in CCPs Note: This is just an illustrative example data are not necessarily correct! 22

23 Procyclicality Margin model Increase in volatility Increase in margin requirements Change in prices due to fire sales 23

24 Other challenges Contingency including cyber crime Recovery plans CPMI/IOSCO Report October 2014 Indirect participants o (PFMI 19) for both CCPs and CSDs o Fewer GCMs in CCPs: more concentration risk CSDR s requirement for mandatory buy-ins 24

25 SUMMARY 25

26 New regulation is more international and more comprehensive Trade & post trade is more international More use of CCPs Oversight focus in a changing landscape o o o o More international cooperation CCPs: complex financial risk CSDR-implementation in Norway Contingency & recovery

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