Policy and tools

We supervise FMIs within a legal and regulatory context that is set at UK and international levels

In this section

Onshored legislation and Requirements for UK CSDs, Recognised clearing houses, UK CCPs and Payment Systems

The UK has made various legislative changes to ensure a functioning legal framework for financial regulation following the UK’s withdrawal from the EU and the end of the transition period.

The Bank has implemented some of these legal changes, including in relation to FMI rules and FMI-related binding technical standards. We have made these amendments to FMI rules and technical standards via ‘EU Exit Instruments’.

The Bank has also set out its use of the temporary transitional power (TTP) and it has published its transitional direction (the legal instrument that gives effect to this power) in December 2020. 

In accordance with the EU (Withdrawal Agreement) Act 2020, the Exit Instruments and transitional direction came into effect at the end of the transition period. 

The consultation papers and policy statements published before the end of the transition period relating to changes to FMI rules and binding technical standards, and the TTP, are listed below: 

We have also published a Joint Bank and PRA Statement of Policy (SoP), which outlines the Bank’s and PRA’s approach to EU Guidelines and Recommendations after the end of the transition period. This statement sets out the expectation for firms and FMIs to continue to make every effort to comply with EU Guidelines and Recommendations to the extent they remain relevant after the end of the transition period. In order to aid firms and FMIs, the appendices of the statement contains links to republished copies of EU Guidelines and Recommendations as at the end of the transition period. 
 
Additional Bank of England materials relating to changes that are relevant to the Bank’s role as FMI competent authority include:

There are six main Regulations made by HM Treasury (HMT) which make amendments to the retained EMIR. They are:

There are two main Regulations made by HMT which make amendments to the retained CSDR. They are:

There are two main Regulations made by HMT which make amendments to the UK settlement finality regime. They are:

Enforcement powers

We also have enforcement powers under the different legal regimes applicable to FMIs.

Requirements powers

We also have the power to issue requirements to recognised UK CSDs, recognised UK CCPs and systemic third-country CCPs. See the Statement of Policy which clarifies the Bank’s policy on these requirements powers with respect to the allocation of decision-making regarding statutory notices, its approach to supervisory statutory notice decision-making, and its approach to publication of supervisory statutory notice decisions.

Crisis information

Financial market infrastructures are critical to a stable financial system. Systems should contact their supervisors in the first instance if they have any issues. 

Insolvency practitioners’ protocol

The purpose of the industry insolvency protocol is to promote a clearer understanding of the regime (set out in Part VII of the Companies Act 1989) and the responsibilities of central counterparties (CCPs) and insolvency practitioners (IPs) in the event of a default in relation to an insolvent clearing member. 

The protocol is non-binding and sets out the mutual understanding of the IPs and CCPs as to procedures that they consider would be desirable to be followed in such a default event.

The protocol includes:

  • procedures to facilitate coordination and information exchange between IPs and CCPs
  • the legal obligations of IPs and CCPs under Part VII of the Companies Act and EMIR (for CCPs)
  • the responsibilities of IPs and CCPs in cases where either the special administration regime (SAR) or general administration (under insolvency law) is applied
  • practical arrangements for CCPs and IPs to achieve their respective objectives

The protocol is relevant for participants in central clearing including:

  • CCPs, clearing members and their clients
  • relevant authorities such as the Bank of England, HMT and the FCA
  • IP; and any other party that may consider itself affected by the default of a clearing member

Guidance on recognised clearing houses for insolvency practitioners

Regulatory fees

The Bank has statutory powers to require FMIs to pay fees relating to supervisory work and for certain applications.

The Bank levies fees for its FMI supervisory activity and the policy activity which supports this, as permitted by the Bank’s fee powers. This includes the costs of FMI supervision staff together with relevant policy support, specialist resources and corporate services and other costs associated with the work of the FMID. Other areas of activity undertaken by FMID not within the scope of the powers set out above will continue to be funded out of the Bank’s broader budget.

Stablecoin

Stablecoins are a form of digital asset that can be used to make payments. They tend to be less volatile than cryptoassets. That is because their value is tied to other, stable, assets.

The Bank of England has recently published a Discussion Paper setting out its proposed regime for systemic payments systems using stablecoins and related service providers. 

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This page was last updated 19 September 2024