Financial Market Infrastructures – a new era of responsibility for individuals

20/06/2022

HMT has announced that it intends to proceed with its new Senior Managers & Certification Regime (SM&CR) for financial market infrastructures (FMIs). The new regime will be similar to the SM&CR for other regulated financial services firms, and will introduce a new era of personal responsibility for individuals within FMIs. Background FMIs underpin the functioning and stability of the entire UK financial system with a large concentration of risk. Against this backdrop, HMT wishes to introduce a SM&CR for FMIs in order to strengthen individual accountability for senior management, promote high conduct standards amongst all staff, and ensure good governance standards more generally. The FMIs covered by HMT’s consultation were: central counterparties (CCPs); central securities depositories (CSDs); payment systems recognised under the Banking Act 2009 (recognised payment systems) and specific service providers to such payment systems. The proposals included a senior managers regime which would allow the Bank of England (BoE) to determine the suitability of key individuals and impose a duty for senior managers to take reasonable steps to prevent or stop regulatory breaches. Under the proposed certification regime FMIs would be required to certify relevant staff as fit and proper. The BoE would also have powers to take enforcement action for misconduct. We discussed HMT’s consultation in more detail in our previous article. Responses to the consultation HMT received a total of 13 responses, the majority of which were broadly supportive. Most respondents agreed with the regime in principle, and indeed some respondents said they have already voluntarily introduced arrangements for senior personnel which ...