Implementation monitoring of PFMI: Level 2 assessment report for Canada

The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) closely monitors the implementation of the Principles for financial market infrastructures (PFMI). This report presents the conclusions drawn by the CPMI and IOSCO from a Level 2 assessment of whether, and to what degree, the legal, regulatory and oversight frameworks for financial market infrastructures (FMIs) in Canada, including rules and regulations, any relevant policy statements, or other forms of implementation, are complete and consistent with the Principles. 

The Principles within the PFMI set expectations for the design and operation of key FMIs to enhance their safety and efficiency, limit systemic risk, and foster transparency and financial stability. The Principles apply to all systemically important payment systems (PSs), central securities depositories (CSDs), securities settlement systems (SSSs), central counterparties (CCPs) and trade repositories (TRs). In line with G20 expectations, CPMI and IOSCO members have committed to implementing and applying the PFMI in their respective jurisdictions. 

The Bank of Canada, the federal Department of Finance and certain provincial securities regulators that are members of the Canadian Securities Administrators are responsible for the regulation, supervision and oversight of FMIs in Canada. PSs are jointly regulated by the Bank of Canada and the federal Department of Finance. CCPs and CSDs/SSSs are jointly regulated by the Bank of Canada and provincial securities regulators. TRs are regulated by provincial securities regulators. 

The work on this Level 2 assessment was carried out as a peer review from August 2017 to April 2018. The assessment reflects the status of Canada's legal, regulatory and oversight framework as of 30 June 2017. Accordingly, assessment ratings reflect the implementation measures in place as of 30 June 2017; other measures that were introduced after this date, or other material developments, are noted where relevant but not considered in assigning ratings of consistency. 

The assessment found that Canada has broadly adopted the Principles. For PSs, CSDs/SSSs and CCPs, the Principles have been implemented in a complete and consistent manner with the exception of Principle 7 on liquidity risk management. For TRs, a number of gaps were identified with varying severity. Principles 19, 20 and 21 on tiered participation arrangements, FMI links, and efficiency and effectiveness, respectively, have not been fully implemented.