Release of the 2019 Bank of Canada FMI Oversight Activities Annual Report

The Bank of Canada today published the Bank of Canada Oversight Activities for Financial Market Infrastructures 2019 Annual Report (the Report) on its oversight of payment clearing and settlement systems, which are also known as financial market infrastructures (FMIs). 

The Bank has a mandate to ensure that designated FMIs are following sound risk management practices. The Report outlines how the Bank fulfills this mandate and provides stakeholders with information about the following:  

• the Bank’s approach to oversight of FMIs
• improvements designated FMIs made to their risk management practices in 2019 
• expectations set out by the Bank for designated FMIs to enhance their risk management practices in 2020 and beyond 
• oversight activities conducted by the Bank

The report focuses on oversight activities in 2019. It does not discuss the COVID‑19 crisis and its effect on designated FMIs. However, Bank staff are closely monitoring the situation to ensure that designated FMIs are adequately controlling their risk. Since the onset of the pandemic, designated FMIs have managed their operations effectively. Staff at FMIs have transitioned to remote work arrangements and are managing significant volumes of transactions and heightened financial market volatility.

Throughout 2019, designated FMIs continued to enhance their risk management practices in key areas and address any gaps previously identified by the Bank. This includes making advancements in their modernization initiatives and all other outstanding priorities. As a result of the COVID‑19 pandemic, FMIs are likely to see some delays on long-term projects, including modernization programs and other oversight priorities. Nonetheless, the Bank expects FMIs to adjust to the new environment and continue making progress on these important initiatives.

The Bank also made significant progress on its own oversight priorities. Notably by advancing an FMI resolution regime for Canada, contributing to the work of international committees, and strengthening the cyber resiliency of FMIs and the financial sector more broadly. Beyond this, the Bank continued to conduct research to deepen the understanding of issues related to FMIs and the Bank’s oversight function.