UK's BoE Financial Market Infrastructure Committee responds to HMT recommendations

The Bank of England (BoE) has published a letter dated 15 July, responding to the Chancellor of the Exchequer's letter that set out the government's recommendations to the BoE's Financial Market Infrastructure Committee (FMIC). The BoE reaffirms its support for the UK government's objectives of sustainable economic growth and innovation and outlines how its regulatory approach to Financial Market Infrastructures (FMIs) contributes to these goals. The BoE confirms it will take the Chancellor's five policy recommendations into account "to the extent relevant and practicable" and sets out a comprehensive set of actions in the Annex to the letter, demonstrating how the policymaking for central counterparties (CCPs) and central securities depositories supports the recommendations.

Specifically by: (i) strengthening financial stability through finalising new fundamental rules for FMI and enhanced CCP capital and operational resilience standards; (ii) facilitating innovation by supporting initiatives like the transition to T+1 settlement, tokenised collateral and the Digital Securities Sandbox; (iii) ensuring proportionate regulation by publishing its supervisory approach to onboarding new FMIs and embedding cost-benefit analysis; (iv) reducing administrative burdens by working on simplified processes and greater transparency on rule permissions; and (v) maintaining the UK's global leadership by aligning with international standards and fostering cross-border supervisory cooperation.

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