Course Overview:
The Principles
of Financial Market Infrastructure course provides a
comprehensive understanding of the core components that support the functioning
of financial markets globally. Designed for professionals working in central
banks, regulatory bodies, and financial institutions, this course dives into
the key elements of financial market infrastructure (FMI), such as payment
systems, securities settlement systems, and central counterparties. It examines
the role of these infrastructures in ensuring the stability, efficiency, and
resilience of financial markets.
Through an
in-depth exploration of international standards, regulations, and best
practices, this course will equip participants with the knowledge to assess,
design, and improve FMIs in line with global financial stability objectives.
Participants will also gain a deep understanding of how to mitigate risks such
as settlement failures, cyber threats, and operational disruptions that can
affect market functioning.
Financial market
infrastructure refers to the underlying systems and networks that facilitate
the clearing, settlement, and recording of financial transactions, ensuring the
smooth functioning of financial markets. These infrastructures are the backbone
of the financial system, comprising payment systems, securities settlement
systems, central counterparty clearing systems, and trade repositories. Their
role is crucial in ensuring the integrity, efficiency, and security of
financial transactions, both domestic and cross-border.
This course
focuses on the principles of effective financial market infrastructure design,
including the standards and regulations that guide their development. It
explores the critical functions of these infrastructures, their risks, and how
they are evolving in response to technological advancements, regulatory
changes, and global financial market trends. Participants will learn the
frameworks for assessing the resilience and effectiveness of FMIs, as well as
the emerging risks and challenges they face in an increasingly digitalized and
interconnected financial world.
Course Objectives:
- Understand
the key components of financial market infrastructure (FMI) and their role
in supporting financial markets.
- Gain
knowledge of international standards, including those set by the Committee
on Payments and Market Infrastructures (CPMI) and the International
Organization of Securities Commissions (IOSCO).
- Understand
the functions of payment systems, securities settlement systems, and
central counterparties (CCPs).
- Learn the
principles and practices behind the design and operation of FMIs.
- Examine the
regulatory frameworks governing FMIs and their role in financial
stability.
- Explore risk
management practices within FMIs and how they prevent systemic risk.
- Gain
insights into the challenges of ensuring the security and resilience of
financial market infrastructure.
- Understand
the role of central banks and regulators in overseeing FMIs to ensure
their smooth operation.
- Study the
processes involved in the clearing, settlement, and recording of financial
transactions.
- Learn about
the emerging risks to FMIs, including cyber threats and operational
failures, and how they are being mitigated.
- Understand
the impact of technological innovations such as blockchain and digital
currencies on FMIs.
- Explore
best practices for FMI oversight and governance, with a focus on
accountability and transparency.
- Learn how
to assess and evaluate FMIs based on efficiency, stability, and risk
management.
- Understand
the role of FMIs in cross-border transactions and the coordination needed
for global financial stability.
- Develop
strategies to strengthen the resilience and security of financial market
infrastructures.
Benefits of the Course to the Organization
- Enhanced
understanding of how financial market infrastructures underpin financial
stability.
- Improved
risk management strategies within payment systems and securities
settlement processes.
- Ability to
align FMI operations with international standards and regulatory
requirements.
- Strengthened
capacity for assessing and addressing systemic risks in the financial
system.
- Increased
understanding of emerging trends and technologies impacting FMIs,
including blockchain and digital currencies.
- Improved
regulatory compliance with global financial infrastructure standards.
- Enhanced
security measures to mitigate cyber threats and operational disruptions in
FMIs.
- Better
oversight of FMIs to ensure their smooth operation and mitigate risks to
financial markets.
- Strengthened
decision-making capabilities for improving operational efficiency and
resilience in FMIs.
- Greater
understanding of the importance of transparency and accountability in FMI
governance.
- Enhanced
capacity to design and improve FMIs to meet the evolving demands of the
global financial system.
- Improved
coordination across jurisdictions to ensure the resilience of cross-border
financial systems.
- Strengthened
ability to oversee and regulate FMIs effectively within the organization's
national financial system.
- Increased
capacity to evaluate and monitor the performance and security of FMIs.
- Ability to
develop and implement strategies to enhance the security of financial
transactions and minimize operational risks.
- A better
understanding of the role of central banks in overseeing the smooth
operation of FMIs.
Benefits of the Course to the Participants
- A
comprehensive understanding of the principles and functions of financial
market infrastructure.
- Knowledge
of international standards and best practices in the design and operation
of FMIs.
- Insights
into how payment systems, securities settlement systems, and CCPs function
in supporting financial markets.
- The ability
to assess and manage risks inherent in FMIs, including settlement failures
and operational disruptions.
- A deeper
understanding of the role of central banks and regulators in the oversight
of FMIs.
- The skills
to evaluate the resilience, stability, and efficiency of FMIs.
- Insights
into the regulatory and legal frameworks governing financial market
infrastructure.
- A better
understanding of the emerging risks and opportunities for FMIs in an
increasingly digitalized financial world.
- The ability
to contribute to the development and improvement of FMIs within their
organization.
- Enhanced
capacity to implement security and resilience measures for FMIs to protect
against cyber risks and other threats.
- Knowledge
of how FMIs interact in cross-border transactions and the importance of
global coordination in financial markets.
- Enhanced
problem-solving skills to tackle challenges in ensuring the smooth
functioning of FMIs.
Course Outline:
Day
1: Introduction to Financial Market Infrastructure
- Session 1: Overview of Financial
Market Infrastructure (FMI)
- Definition
and components of FMIs.
- Functions
of FMIs: payment systems, securities settlement, and central
counterparties.
- The
role of FMIs in supporting financial market stability.
- Session 2: Global Standards and
Regulatory Frameworks
- Introduction
to CPMI-IOSCO Principles for Financial Market Infrastructures.
- Key
regulations governing FMIs: Basel III, Dodd-Frank, MiFID II.
- The
role of central banks in overseeing FMIs.
- Session 3: Payment Systems and Their
Role in Financial Markets
- Types
of payment systems: real-time gross settlement systems (RTGS), clearing
systems, and retail payment systems.
- The
importance of payment systems for financial market stability.
- Case
studies of national payment systems.
Day
2: Securities Settlement Systems and Central Counterparties
- Session 1: Securities Settlement
Systems (SSS)
- Key
principles of securities settlement systems.
- The
clearing and settlement process for securities transactions.
- Risk
management practices in securities settlement.
- Session 2: Central Counterparties
(CCPs)
- Role
of CCPs in reducing counterparty risk in derivatives markets.
- The
process of clearing and collateral management through CCPs.
- Regulatory
framework and operational challenges for CCPs.
- Session 3: Case Study on Securities
Settlement and CCPs
- Real-world
examples of securities settlement systems and CCPs in operation.
- Lessons
learned from market disruptions and system failures.
Day
3: Risk Management in FMIs
- Session 1: Key Risks in Financial
Market Infrastructures
- Operational
risks, credit risks, liquidity risks, and systemic risks in FMIs.
- Strategies
to mitigate these risks: redundancy, insurance, and risk-sharing
mechanisms.
- Managing
risks in cross-border transactions.
- Session 2: Cybersecurity and
Resilience in FMIs
- The
growing threat of cyber attacks on FMIs.
- Cybersecurity
best practices for ensuring the resilience of FMIs.
- Developing
response strategies for system failures and operational disruptions.
- Session 3: Crisis Management and
Recovery Planning
- Developing
effective crisis management frameworks for FMIs.
- Recovery
and business continuity planning.
- International
coordination in managing FMI crises.
Day
4: Technological Advancements and Their Impact on FMIs
- Session 1: Blockchain and Distributed
Ledger Technology (DLT) in FMIs
- Introduction
to blockchain and DLT and their potential applications in FMIs.
- Advantages
and challenges of using blockchain for payment and settlement systems.
- Case
studies of blockchain integration into FMIs.
- Session 2: Digital Currencies and
Their Impact on FMIs
- The
role of central bank digital currencies (CBDCs) in transforming payment
systems.
- The
potential impact of cryptocurrencies on financial market infrastructures.
- Regulatory
and operational considerations for digital currencies.
- Session 3: Future Trends in Financial
Market Infrastructure
- Emerging
technologies shaping FMIs: AI, big data, and machine learning.
- The
future of financial market infrastructure in a digital-first world.
- Innovations
in securities settlement and cross-border payment systems.
Day
5: Best Practices in FMI Design, Governance, and Oversight
- Session 1: Principles of FMI Design
and Governance
- Designing
an efficient and resilient FMI.
- Best
practices for FMI governance: transparency, accountability, and
regulatory compliance.
- Role
of central banks and regulators in ensuring good governance.
- Session 2: FMI Oversight and
Performance Evaluation
- Techniques
for assessing FMI efficiency and stability.
- Performance
metrics and benchmarking for FMIs.
- Ongoing
monitoring and evaluation of FMIs.
- Session 3: Group Discussion and Case
Studies
- Interactive
discussions on real-world FMI challenges.
- Group
exercise on evaluating and improving FMIs based on global best practices.
Who Should Attend:
- Central
bank officials responsible for overseeing financial market infrastructure.
- Financial
regulators and policy advisors involved in FMI governance.
- Professionals
working in payment systems, securities settlements, and central
counterparties.
- Financial
institution managers and executives responsible for managing market
infrastructure.
- Technologists
and cybersecurity professionals involved in the development and security
of FMIs.
- Financial
analysts, risk managers, and consultants working with FMIs and their
oversight.
Methods of Training:
- Expert Lectures and Presentations: Led by
experts in financial market infrastructure and global financial systems.
- Case Studies: Real-world
examples and lessons from financial market disruptions and innovations.
- Interactive Workshops: Hands-on
exercises in risk management, crisis response, and FMI design.
- Group Discussions and Debates: Exploring
the future of FMIs, emerging risks, and technology integration.
- Guest Speakers: Insights
from international regulatory bodies, central banks, and fintech
companies.