SEBI Emphasizes Adherence To Global Standards With New Circular On Financial Market Infrastructure[1]

Posted On - 24 December, 2023 • By - King Stubb & Kasiva

Mumbai, December 19, 2023 – The Securities and Exchange Board of India (SEBI) has taken a significant step towards aligning the Indian financial market infrastructure with global standards. In a circular issued on December 19, 2023, SEBI underscored its commitment to the Principles for Financial Market Infrastructures (PFMIs) issued by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO).

SEBI, as a member of IOSCO, has consistently advocated for the adoption and implementation of the CPSS-IOSCO Principles for Financial Market Infrastructures in its regulatory oversight of key Financial Market Infrastructures (FMIs). The latest circular reaffirms SEBI’s dedication to these principles, emphasizing their importance in promoting the stability and resilience of the global financial system.

The PFMIs, comprising 24 principles issued in April 2012 (refer to Annexure 1), are designed to fortify the infrastructure supporting global financial markets. These principles specifically apply to systematically important FMI entities, including Central Counterparties (CCPs), Central Securities Depositories (CSDs)/Securities Settlement Systems (SSS), Payment and Settlement Systems (PSS), and Trade Repositories (TRs). These entities play a pivotal role in the clearing, settlement, and recording of monetary and other financial transactions.

The international standards set forth by the PFMIs aim to achieve several key objectives:

  • Enhance safety and efficiency in payment, clearing, settlement, and recording arrangements.
  • Reduce systemic risk within the financial system.
  • Foster transparency and contribute to financial stability.
  • Promote the protection of participants and investors in the financial markets.
  • By emphasizing adherence to these principles, SEBI seeks to bolster the integrity and resilience of India’s financial market infrastructure. Market participants and stakeholders are encouraged to familiarize themselves with the circular and its implications, as SEBI continues its efforts to align with global best practices in financial regulation.