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:

1. Understand the key components of financial market infrastructure (FMI) and their role in supporting financial markets.
2. 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).
3. Understand the functions of payment systems, securities settlement systems, and central counterparties (CCPs).
4. Learn the principles and practices behind the design and operation of FMIs.
5. Examine the regulatory frameworks governing FMIs and their role in financial stability.
6. Explore risk management practices within FMIs and how they prevent systemic risk.
7. Gain insights into the challenges of ensuring the security and resilience of financial market infrastructure.
8. Understand the role of central banks and regulators in overseeing FMIs to ensure their smooth operation.
9. Study the processes involved in the clearing, settlement, and recording of financial transactions.
10. Learn about the emerging risks to FMIs, including cyber threats and operational failures, and how they are being mitigated.
11. Understand the impact of technological innovations such as blockchain and digital currencies on FMIs.
12. Explore best practices for FMI oversight and governance, with a focus on accountability and transparency.
13. Learn how to assess and evaluate FMIs based on efficiency, stability, and risk management.
14. Understand the role of FMIs in cross-border transactions and the coordination needed for global financial stability.
15. Develop strategies to strengthen the resilience and security of financial market infrastructures.

Benefits of the Course to the Organization

1. Enhanced understanding of how financial market infrastructures underpin financial stability.
2. Improved risk management strategies within payment systems and securities settlement processes.
3. Ability to align FMI operations with international standards and regulatory requirements.
4. Strengthened capacity for assessing and addressing systemic risks in the financial system.
5. Increased understanding of emerging trends and technologies impacting FMIs, including blockchain and digital currencies.
6. Improved regulatory compliance with global financial infrastructure standards.
7. Enhanced security measures to mitigate cyber threats and operational disruptions in FMIs.
8. Better oversight of FMIs to ensure their smooth operation and mitigate risks to financial markets.
9. Strengthened decision-making capabilities for improving operational efficiency and resilience in FMIs.
10. Greater understanding of the importance of transparency and accountability in FMI governance.
11. Enhanced capacity to design and improve FMIs to meet the evolving demands of the global financial system.
12. Improved coordination across jurisdictions to ensure the resilience of cross-border financial systems.
13. Strengthened ability to oversee and regulate FMIs effectively within the organization's national financial system.
14. Increased capacity to evaluate and monitor the performance and security of FMIs.
15. Ability to develop and implement strategies to enhance the security of financial transactions and minimize operational risks.
16. A better understanding of the role of central banks in overseeing the smooth operation of FMIs.

Benefits of the Course to the Participants

1. A comprehensive understanding of the principles and functions of financial market infrastructure.
2. Knowledge of international standards and best practices in the design and operation of FMIs.
3. Insights into how payment systems, securities settlement systems, and CCPs function in supporting financial markets.
4. The ability to assess and manage risks inherent in FMIs, including settlement failures and operational disruptions.
5. A deeper understanding of the role of central banks and regulators in the oversight of FMIs.
6. The skills to evaluate the resilience, stability, and efficiency of FMIs.
7. Insights into the regulatory and legal frameworks governing financial market infrastructure.
8. A better understanding of the emerging risks and opportunities for FMIs in an increasingly digitalized financial world.
9. The ability to contribute to the development and improvement of FMIs within their organization.
10. Enhanced capacity to implement security and resilience measures for FMIs to protect against cyber risks and other threats.
11. Knowledge of how FMIs interact in cross-border transactions and the importance of global coordination in financial markets.
12. 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.