CPMI-IOSCO finalise guidance on how much equity FMIs must hold against business losses

On 14 October the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published final guidance on how financial market infrastructures (FMIs) should manage general business risks and the losses they can cause. The guidance applies to central counterparties, central securities depositories, payment systems and other FMIs.

The report supplements Principle 15 of the Principles for Financial Market Infrastructures (PFMI). It covers three areas:

• identifying, monitoring and managing general business risk
• setting the minimum amount of liquid net assets funded by equity (LNAFE)
• governance and transparency

It builds on a consultative report from November 2025. It also draws on a Level 3 implementation assessment, published the same month, which found “gaps and material differences” in how FMIs apply Principle 15. The standard setters attribute some of those issues to “a lack of common understanding of the PFMI”.

The sizing rule

The core of the guidance is the LNAFE calculation.

The minimum. An FMI should hold enough LNAFE at all times to carry out its recovery and orderly wind-down plans. At a minimum, it should hold the equivalent of six months of current operating expenses. FMIs should estimate the full cost of recovery and wind-down, including ordinary expenses, extraordinary expenses and any losses LNAFE would have to absorb, and hold “at least the greater of the two amounts”.

Assets and equity. Both sides of the balance sheet count. An FMI should have liquid assets and equity “that are each equal to or greater than its required amount of LNAFE”.

Asset quality. Liquid assets should be high quality, free of liens and encumbrances, marked to market with haircuts where they are securities, and assessed for how quickly they can be converted into the currency needed. Cash in term deposits should be judged on when it would actually be available, net of any early-withdrawal penalties.

Operating expenses. The six-month figure should be based on business-as-usual operating expenses and may exclude depreciation and amortisation. It should be recalculated on a rolling basis.

The report encourages FMIs to hold a buffer above the minimum so that market movements do not push them below it. It also asks them to maintain a “viable plan for raising additional equity” and to consider consulting stakeholders on whether the plan is workable.

Triggers and disclosure

FMIs are expected to identify scenarios in which business losses could threaten their viability. They should set clear triggers or indicators for escalation and for invoking their recovery plans.

Boards should oversee the framework. FMIs should also disclose enough about their approach for participants to understand “the risks, fees and other material costs they incur by participating”.

Why it matters

For clearing members, this guidance governs the money that stands between a non-default loss and their own exposure. Principle 15 defines general business risk to include “poor execution of business strategy”, “negative cash flows” and unexpectedly large operating expenses.

The “greater of” test will push infrastructures with expensive or lengthy wind-down plans above the six-month floor. The requirement that both liquid assets and equity cover the figure closes off balance sheets that are strong in one and weak in the other.

National regulators will now need to reflect the guidance in supervision. Members’ risk teams can use the new disclosure expectations to ask CCPs and CSDs more detailed questions about how their LNAFE is calculated and what it is held in.

Sources

• BIS, “Global standard-setting bodies publish final report on guidance for FMIs on general business risks and general business losses”, 14 October 2026 — https://www.bis.org/media-releases/20261014-global-standard-setting-bodies-publish-final-report-guidance-fmis-general-business-risks-and
• CPMI-IOSCO, “FMIs’ management of general business risks and general business losses – final report”, October 2026 — https://www.bis.org/publications/final-report-fmis-management-general-business-risks-and-general-business-losses-further-guidance-pfmi.pdf