A clear snapshot of how the United Kingdom's legal and oversight frameworks align with the PFMI, noting full consistency for payment systems and areas for improvement for CSDs/SSSs
The United kingdom underwent a focused review of the regulatory architecture that governs major financial market infrastructures. This assessment examines whether the country’s legal, regulatory and oversight arrangements align with the Principles for financial market infrastructures (PFMI), a global standard developed by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO).
The report evaluates frameworks for payment systems (PSs) and for central securities depositories (CSDs) and securities settlement systems (SSSs), reflecting the state of implementation as of 30 September 2026. The review explicitly excludes changes occurring after that assessment date, so later reforms fall outside its scope.
Key findings summary
The assessment concludes that the United Kingdom’s framework for systemically important payment systems is complete and consistent with the PFMI. In plain terms, the arrangements that govern the design, operation and oversight of large-value and retail payment infrastructures meet the international benchmark across all relevant principles.
By contrast, the legal and supervisory frameworks for CSDs/SSSs were found to be complete and consistent in most respects, but the evaluation flagged specific points where implementation is broadly consistent, partly consistent or not consistent with particular PFMI expectations. These mixed outcomes are concentrated mainly around governance and risk-related principles.
Scope, methodology and limitations
The review is a Level 2 implementation monitoring exercise focused on legal, regulatory and oversight frameworks rather than operational testing. It assessed statutory powers, regulatory expectations, and oversight practices as they applied to PSs and CSDs/SSSs at the cut-off date of 30 September 2026. The methodology follows the standard CPMI‑IOSCO template: mapping local rules against each PFMI principle and identifying whether implementation is complete, broadly consistent, partly consistent or not consistent. Importantly, the report does not cover developments after the assessment date; any subsequent policy changes, supervisory actions or legislative amendments are outside the report’s remit.
Areas requiring attention
While the majority of principles for payment systems are fully met, the evaluation highlights targeted improvements for CSDs/SSSs. The most notable gaps relate to risk management and governance arrangements—areas that underpin operational resilience, default management and decision-making transparency. The report recommends closer alignment of certain supervisory expectations and clearer legal powers where they were judged insufficiently precise. These findings indicate actionable steps for regulators and market participants to strengthen resilience in securities settlement processes without undermining the substantial progress already achieved.
Specific governance and risk observations
Examined in detail, the report points to governance practices—such as board responsibilities, conflict-of-interest policies and accountability mechanisms—that would benefit from refinement to meet the strictest interpretation of the PFMI. On the risk front, recommended enhancements include clearer requirements for operational risk controls, contingency planning and stress-testing tailored to the particular architectures of CSDs and SSSs. These improvements are framed as calibrations rather than wholesale redesigns, reflecting that many core protections are already in place.
Context and historical note
For context, the United Kingdom’s arrangements for other infrastructure types—namely central counterparties (CCPs) and trade repositories (TRs)—were previously examined under a separate assessment published in February 2015. That earlier report covered analogous legal and oversight domains for those infrastructure categories. Together, the 2015 evaluation and the current Level 2 monitoring create a broader record of the United Kingdom’s alignment with international standards across major financial market infrastructures, while the present report provides a focused update for PSs and CSDs/SSSs.
Implications for policymakers and market participants
The practical takeaway is straightforward: regulators can rely on a broadly robust framework for payment systems, while authorities and operators in the securities settlement space should prioritize governance and risk enhancements identified in the report. Implementing those targeted measures will help ensure the United Kingdom’s infrastructures remain consistent with the PFMI baseline and resilient against evolving market and operational risks. Stakeholders should monitor follow-up communications from supervisory bodies regarding implementation timelines and next steps.
