The Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) have published a final report providing guidance on how financial market infrastructures (FMIs) should manage general business risks and losses. This joint standard-setting effort aims to clarify expectations for FMIs and relevant authorities, particularly within the contexts of recovery planning and orderly wind-down procedures.
The guidance focuses on three core areas: identifying, monitoring, and managing general business risks; determining the minimum amount of liquid net assets funded by equity that must be held to cover potential general business losses; and establishing governance and transparency standards for these risk management practices. The final publication builds upon a consultative report released in November 2025, which sought feedback on similar issues.
This development follows findings from a Level 3 assessment report regarding the implementation of PFMI Principle 15, which addresses general business risk. That earlier assessment identified specific shortcomings in how FMIs currently manage these risks and maintain sufficient liquid net assets funded by equity to absorb potential losses. CPMI and IOSCO acknowledged the thorough responses received during the consultation process as they finalized this guidance.
The publication of this final report marks a concrete step toward harmonizing global expectations for FMI resilience beyond traditional credit and liquidity risks. By explicitly linking general business risk management to recovery and orderly wind-down frameworks, CPMI and IOSCO are addressing a gap where operational failures or unexpected costs could threaten systemic stability even if core settlement functions remain intact. The emphasis on defining minimum liquid net assets funded by equity provides a quantifiable benchmark for regulators and FMIs alike, moving the discussion from qualitative principles to measurable capital adequacy requirements.
For market participants, this guidance signals increased regulatory scrutiny on balance sheet composition and governance structures related to non-credit risks. FMIs will need to review their existing capital buffers against the new definitions of "liquid net assets" and ensure their disclosure practices meet the enhanced transparency standards. The reference to prior Level 3 assessment findings suggests that many institutions may currently fall short of these emerging best practices, potentially requiring significant operational adjustments or capital reallocation to comply with the updated framework.
