Fundamental Rules for Financial Market Infrastructures: policy statement

Overview

This Bank of England (the Bank) policy statement (PS) provides feedback to responses the Bank received to the consultation paper (CP) on Fundamental Rules for Financial Market Infrastructures (FMIs).^{footnote [1]} It also contains the Bank’s final policy (taking effect on 18 July 2026). The Bank's final policy is reflected in:

• The Fundamental Rules Part of the Bank of England FMI Rulebook for Central Counterparties (CCPs) and for Central Securities Depositories (CSDs) (Appendix 1).
• The Code of Practice on Fundamental Rules for Recognised Payment System Operators (RPSOs) and Specified Service Providers (SSPs) (Appendix 2).
• A supervisory statement (SS) on ‘Fundamental Rules for FMIs’ (Appendix 3).

This PS is relevant for recognised UK CCPs, recognised UK CSDs, UK RPSOs and UK SSPs. Third-country CSDs and ‘systemic overseas CCPs’ are not in scope, but should HM Treasury (HMT) make regulations in future that allow for the application of these rules to third-country CSDs, or set criteria of general application in respect of the definition of a 'systemic overseas CCP', the Bank may look to expand the rules to these entities. Although non-UK RPSOs and non-UK SSPs also fall outside of the scope of these proposals, the Bank may also look to extend the rules to these entities in the future. In such circumstances, and in line with the approach set out in the Bank of England’s approach to financial market infrastructure supervision^{footnote [2]} the Bank may decide to place reliance on a home regulator’s supervisory regime where appropriate to do so.

In the CP on Fundamental Rules for FMIs the Bank proposed a set of ten rules that outline the high-level outcomes that the Bank requires FMIs to achieve. More details on the Bank’s expectations relating to these rules were set out in the accompanying proposed SS. The Fundamental Rules are also complemented by existing requirements for FMIs, such as codes of practice relating to RPSOs and SSPs, and onshored legislation for CCPs and CSDs.

The Fundamental Rules are the first instance in which the Bank has made rules using its new general rule making power over CCPs and CSDs granted under the Financial Services and Markets Act (FSMA) 2000 as amended by FSMA 2023 and are available in the Bank’s FMI Rulebook.

In determining its policy, the Bank considers representations received in response to consultation, publishing an account of them and the Bank's response (‘feedback’). In this PS, the ‘Summary of responses’ section below contains a general account of the representations made and the ‘Feedback to responses’ chapter contains the Bank's feedback.

In carrying out its policy making functions, the Bank is required to have regard to various matters. In the related CP, the Bank considered these matters and explained in detail how it had regard to the most relevant of these matters in relation to the proposed policy. The Bank considers that this analysis is still applicable to the final policy. The ‘Statutory obligations’ section of this chapter includes the considerations of relevant statutory obligations we have made, as well as taking into account consultation responses where relevant.

Summary of responses

The Bank’s consultation ran from 19 November 2024 to 19 February 2025. The Bank received 15 responses to the CP. The names of respondents who consented to their names being published are set out in Appendix 4.

Respondents were, in general, supportive of the Bank’s proposals and the outcomes that the Bank aims to achieve through the introduction of these rules. Respondents made a number of substantive comments, drafting suggestions and requests for clarification which are summarised below, and set out in more detail in Chapter 2.

Some responses included comments and suggestions that did not relate directly to the proposals under consultation, including comments on the Bank’s approach to supervision, the broader regulatory framework for FMIs, and the Bank’s secondary innovation objective. The Bank appreciates all responses, and while the Bank has not provided feedback to all responses in this PS, the responses have been noted for future reference.

Changes to draft policy

Having considered the responses to the CP, the Bank has made minor changes to the guidance in the associated SS, the date at which these rules will come into force and the titles of the rule instruments. These changes are in response to the feedback we received on the proposals, as well as changes prompted by our own review of the proposals since publication, including to correct minor inaccuracies. The Bank considers that the additional clarity provided through amendments to the SS, alongside the extended implementation period will help FMIs effectively implement the Fundamental Rules. The key changes to policy are:

• Clarifying that in managing the risks that an FMI may pose to the stability of the financial system, the Bank does not expect that an FMI would take actions that harm its own resilience;
• Placing further emphasis upon the role of FMIs’ transparency with their participants in supporting better risk management;
• Clarifying the application of Fundamental Rules to group activities; and
• Extension of the implementation period from 6 to 12 months.

The Bank has also published a consultation paper outlining its proposals related to ‘Ensuring the Resilience of CCPs’, with the proposed rules intended to replace the obligations applicable to CCPs outlined within UK EMIR Titles III-V. In order to align with the terminology applicable to ‘third country CCPs’ proposed within the ‘Ensuring the resilience of CCPs’ proposals, the Bank has amended the terminology for ‘third country CCPs’ to ‘overseas CCPs’ within the Fundamental Rules policy. The Bank does not consider any further changes to the Fundamental Rules or accompanying SS are required as a result of the ‘Ensuring the resilience of CCPs’ consultation.

Statutory obligations

When making rules, the Bank is required to comply with several legal obligations. In the CP on Fundamental Rules for FMIs, the Bank published its explanation of why the policy and guidance proposed was compatible with its objectives. The Bank has made limited changes to the original proposals and considers the assessment against objectives articulated in the CP to remain applicable to the final policy.

The Bank considers that the changes proposed in this policy statement do not materially impact the cost benefit analysis presented in the consultation paper. While specific costs for some FMIs may vary, the balance of costs and benefits as presented in the CP remains appropriate. Furthermore, in response to feedback, the Bank has extended the implementation period for the Fundamental Rules and added additional detail to the accompanying guidance to support FMIs’ implementation of the rules. Both of these changes may support FMIs in managing the costs of implementing these rules.

Additional Statutory Obligations for CCP and CSD policymaking

On 1 July 2025, the Bank of England received a letter from His Majesty’s Treasury (HMT) entitled ‘Remit and recommendations for the Financial Market Infrastructure Committee (FMIC)’^{footnote [3]} which detailed aspects of the government’s economic policy to which the FMIC should have regard when considering how to advance relevant statutory objectives and regulatory principles in the exercise of its FMI functions. This letter set out the following recommendations, which are relevant to policy making applicable to CCPS and CSDs:

• The vital role UK FMIs plays in protecting and upholding the financial stability of the UK, as well as other global markets.  
• The importance of actively facilitating innovation in FMIs so that incumbents and new entrants are able to innovate responsibly and scale up new technology and products processes in the UK.
• The role of proportionate regulation in facilitating growth.
• Streamlining administrative burdens and processes for FMIs to offer new products and services where possible, whilst maintaining high regulatory standards.  
• Maintaining and enhancing the UK’s position as a world-leading global finance hub and demonstrating continued leadership in global regulatory fora. 

While the consultation on the Fundamental Rules was published prior to receiving the letter, the Bank considers the final policy is consistent with the recommendations noted above. In particular, and as noted in the statutory obligations section of the CP, the policy supports protecting and upholding the financial stability of the UK, as well as other global markets through enhancing FMI regulation and therefore the resilience of UK FMIs, many of which are significant in jurisdictions beyond the UK. The Bank also considers that the rules facilitate innovation in FMIs, by ensuring that high level regulatory outcomes are understood by FMIs even if more prescriptive rules change over time, allowing incumbents and new entrants to safely innovate.

Implementation

The rules, and the guidance in the SS, will take effect on 18 July 2026.

Bank response to consultation feedback received

Before making any proposed rules, the Bank is required by the Financial Services and Markets Act 2000 (FSMA) to have regard to any representations made to it in response to consultation, and to publish an account, in general terms, of those representations and its feedback to them.^{footnote [4]}

The Bank has considered the representations received in response to the CP. In addition, the Bank held two roundtable events with FMIs during the consultation period, in part to discuss these proposals. General themes from those events have been considered alongside the specific responses the Bank received to its consultation. This chapter sets out the Bank's feedback to those responses and explains the Bank’s final policy.

This section is separated into those areas where changes have been made in response to consultation feedback or general corrections, and feedback in respect of which we have not made changes in the final policy but have clarified the Bank’s position.

Policy changes

Clarifying that in managing the risks that an FMI may pose to the stability of the financial system, the Bank does not expect that it would take actions that harm its own resilience

The Bank has included further clarity in the SS to outline the scope and application of Fundamental Rule 10, which requires that ‘An FMI must identify, assess, and manage the risks that its operations could pose to the stability of the financial system’. This is in response to requests for clarity around the scope of the rule, specifically around the extent to which FMIs would be expected to manage risks to the stability of the financial system that they may not have sufficient oversight or control of. FMIs further requested clarity on the extent to which this Fundamental Rule might require the FMI to take action that may harm its own resilience.

The changes that the Bank has introduced make clear that any action or inaction by an FMI to manage the risk that the FMI poses to the stability of the financial system is subject to preserving its own resilience.

Some respondents also suggested that FR10 be amended to include explicit reference to ‘reasonableness’ in the scope of the rule. The Bank has considered this, and while it has not included explicit reference to reasonableness in the rule itself, it has amended the supporting guidance in the SS to make it clear that our expectations around FMIs’ ability to foresee risks and mitigate them takes into account information that the FMI could reasonably be expected to act upon. The Bank also notes that as part of its supervision of FMIs^{footnote [5]} against regulatory requirements, the Bank will be fair and proportionate, including in its approach to enforcement.^{footnote [6]} This involves considering the particular facts of the relevant case, including how foreseeable a particular risk was, or should have been.

Placing further emphasis upon the role of FMIs’ transparency with their participants in supporting better risk management

The Bank has expanded on its reference to transparency in the proposed accompanying guidance under Fundamental Rule 1, which requires that ‘An FMI must conduct its business with integrity’. A common theme across a number of the responses to the consultation was a request for further emphasis to be placed on the importance of transparency between FMIs and their participants. Respondents emphasised that enhanced transparency between FMIs and their participants would support effective risk management at these participants, through giving them a greater understanding of the risks they were exposed to through the use of FMI services.

The Bank has therefore made it clear that it expects an appropriate level of transparency between FMIs and their participants to support their understanding of the risks they incur through participation. The Bank considers that this will contribute to financial stability through enhanced resilience at FMIs through a better understanding and management of risks by their participants. This is consistent with Principle 23 of the Principles for Financial Market Infrastructures (PFMI) which establishes that FMIs should provide sufficient information to their participants to enable them to have an accurate understanding of the risks that they incur.^{footnote [7]} The Bank has also noted, consistent with the PFMIs, that participants bear primary responsibility for understanding the rules, procedures, and risks of participating in an FMI as well as the risks they may incur when the FMI has links with other FMIs.^{footnote [8]}

Clarifying the application of Fundamental Rules to group activities

The Bank has updated the guidance to clarify how it intends to apply the Fundamental Rules to group activities under Fundamental Rule 7, which requires FMIs to deal with its regulators in an open and cooperative way. Respondents expressed concern that this rule covers provision of information concerning other members of an FMIs’ group, which was too broad, leading to the Bank potentially requiring information from non-Bank regulated entities that may be burdensome for FMIs to provide. The Bank has therefore amended its guidance to clarify that the Bank only expects to receive information from the FMIs in scope of the rules relating to an FMIs’ group to the extent that this information could have a material bearing on the FMI being able to meet its regulatory obligations or which might materially affect the activities of the FMI. For example, this could include group activities that may influence the financial or non-financial resources of the FMI and governance or ownership structure of the FMI.

The Bank has also made a change to the definition of ‘group’ within the final rules to better focus the application of the rules. The previous definition of group was the meaning given in section 421 FSMA and included within the definition those with participating interests (meaning a holding of 20% or more of the shares of an undertaking)^{footnote [9]}. The definition has been updated to refer more narrowly to the meaning of section 1162 of the Companies Act 2006^{footnote [10]}. This definition captures parent and subsidiary relationships where there is a majority stake owned by the parent group.

Extension of the implementation period from 6 to 12 months

The Bank has extended the implementation period for all Fundamental Rules to 12 months to 18 July 2026. This is in response to feedback that an extended implementation timeline would be beneficial for effective implementation of the rules. This was particularly in relation to Fundamental Rule 10, which respondents considered was the proposal which could require the most significant change to FMIs’ internal processes. This change will support FMIs in implementing all the Fundamental Rules, including FR10, while ensuring consistency and clarity in implementation across all Fundamental Rules.

Minor amends

The Bank has made some further amendments to the SS which were not based on feedback received. These include some minor amends for clarity and accuracy throughout the document (in paragraphs 6, 8, 25, 31 and 41 of the SS as consulted on). The Bank also deleted paragraph 30 of the SS as consulted on which referred to information sharing with other regulators, and instead refers readers to Chapter 5 of The Bank of England’s approach to financial market infrastructure supervision,^{footnote [11]} which outlines the Bank’s approach to supervising non-UK FMIs and engagement with home authorities. The Bank also deleted an unnecessary sentence in paragraph 10 of the SS as consulted on, which described why restrictions on regulated and unregulated activities were not needed in the RPSO and SSP rules, given the scope of the Bank’s rulemaking power for RPSOs and SSPs. The Bank has also moved the set of illustrative scenarios that were outlined in the original consultation paper into the SS, with some minor edits.

Areas of no policy change

Responses across Fundamental Rules

Explanation of how the Fundamental Rules support innovation

While respondents supported the Bank’s aim to achieve an effective and nimble regulatory framework, some responses asked for more clarity on how the Fundamental Rules supported the Bank’s secondary objective to facilitate innovation in CCP and CSD services. The Bank notes that the Fundamental Rules are intended to clearly and transparently set out the outcomes that the Bank seeks to achieve through its regulation of FMIs, which supports FMIs’ understanding of how they might innovate to achieve these outcomes. The Bank believes this is particularly important for new or prospective entrants, and will help ensure they have a clear understanding of the focus of the Bank’s regulatory framework and the rationale behind more granular rules.

Estimate of costs

Some respondents noted that they expected to incur greater costs as a result of implementing the proposals than those outlined in the Bank’s estimates of costs as part of the cost benefit analysis (CBA) in the CP. These were anticipated to arise through FMIs carrying out a thorough review of current governance and processes to ensure that the rules and guidance were embedded and complied with. The Bank notes that FMIs should be doing this for existing requirements, and that while the Fundamental Rules represent principles of broad application that FMIs should adhere to for the majority of FMIs, compliance with the underlying regulatory framework may assist in demonstrating compliance with the Fundamental Rules. While specific costs for some FMIs may vary, the balance of costs and benefits as presented in the CP remains appropriate. Furthermore, in response to feedback, the Bank has extended the implementation period for the Fundamental Rules and added additional detail to the accompanying guidance to support FMIs’ implementation of the rules. Both of these changes may support FMIs in managing any costs of implementing these rules.

Documenting compliance with Fundamental Rules

Respondents noted that it would be beneficial to understand how they can document compliance against the Fundamental Rules and specifically whether the Bank is expecting FMIs to report their compliance in a specific manner.

The Bank encourages firms to exercise judgement, and take responsibility for what the Fundamental Rules mean in relation to their business. The Fundamental Rules are high-level requirements and within their broad scope compliance can be achieved in different ways. However, as with all rules, should the Bank judge compliance to be inadequate or consider there to be a breach of the Fundamental Rules, the Bank will review potential supervisory actions accordingly.

Further prescriptive guidance

One respondent requested that further prescriptive guidance would be beneficial for Fundamental Rules 5 (Risk management), 7 (Regulator Cooperation) and 10 (System). This was specifically with regard to notification and reporting for Fundamental Rule 5 and Fundamental Rule 7, and a more detailed explanation of the types of risks the Bank expects FMIs to see in relation to Fundamental Rule 10. The Bank has not included more prescriptive guidance, as the Fundamental Rules are intended to be high level and outcome focused, and providing prescriptive guidance would run counter to their overall purpose.

Nature of existing regulatory underlaps

Respondents asked for further clarity from the Bank in relation to regulatory underlaps that were referred to in the initial CP that were being addressed through the introduction of the Fundamental Rules. The Bank notes that known regulatory underlaps vary by FMI type, and the Fundamental Rules future-proof the regulatory regime through their outcome-focussed nature. By setting out the outcomes that more prescriptive rules are designed to achieve at this high level the Bank ensures that FMIs have an understanding of the goals of FMI regulation. These outcomes are designed to remain constant, which will support the Bank in changing prescriptive rules to facilitate innovation where necessary.

Responses to individual Fundamental Rules

Fundamental Rule 3 ‘An FMI must act in a prudent manner’

One respondent expressed concern over Fundamental Rule 3, which could be interpreted as requiring FMIs to be cautious, which could lead to inaction, undermining its resilience. While the Bank acknowledged this risk in the cost benefit analysis provided in the initial consultation paper, it considers this risk to be low, particularly as the guidance in the SS makes clear FMIs should exercise ‘appropriate caution and foresight’. Other Fundamental Rules make clear the importance of maintaining the FMI’s own resilience, and that while we expect FMIs to act with prudence, there is no expectation that FMIs are less proactive in their risk management.

Fundamental Rule 4 ‘An FMI must maintain sufficient financial resources’

The Bank received a comment on Non-Default Losses (NDLs) in relation to CCPs. The respondent noted that resilience related events at CCPs, such as cyber attacks could result in losses that are borne by clearing members. The respondent requested that the Bank consider this further in relation to Fundamental Rule 4 of the supervisory statement. The Bank notes the ongoing CPMI-IOSCO work on FMIs’ management of General Business Risk^{footnote [12]} which it is participating in. The Bank will consider any reforms to the CCP capital regime in the round at a future date.

Fundamental Rule 6 ‘An FMI must organise and control its affairs responsibly and effectively’

Some respondents requested clarity on how Fundamental Rule 6 may relate to any upcoming Senior Managers and Certification Regime (SM&CR) for FMIs, comparable to that in place for PRA-regulated firms. Although HMT legislated for an SM&CR for CCPs and CSDs in FSMA 2023, the implementation of the regime would require secondary legislation. HMT has noted that the Government does not plan to take forward secondary legislation at this point in time to apply SM&CR to CCPs and CSDs.

Fundamental Rule 8 ‘An FMI must prepare for resolution or administration so, if the need arises, it can be resolved or placed into administration in an orderly manner with a minimum disruption to critical services’

One respondent noted that Fundamental Rule 8 does not refer to wind-down, which is the appropriate end state for some RPSOs. The Bank acknowledges this, and notes that paragraph 34 of the accompanying supervisory statement as consulted on states that this rule is not the sole and comprehensive rule on the Bank’s expectations of what FMIs should prepare for. These may include the preparation of wind-down plans, separate to the preparations required under the relevant resolution or administration regimes, as relevant.

Fundamental Rule 10 ‘An FMI must identify, assess, and manage the risks that its operations could pose to the stability of the financial system’

A respondent specifically queried how Fundamental Rule 10 interacts with the recent BCBS-CPMI-IOSCO report on margin transparency.^{footnote [13]} The Bank has been involved with this work,^{footnote [14]} and are consulting on implementing the proposals as part of the consultation paper.