TARGET-Banca d'Italia outlines FMI access for firms in resolution

The document represents TARGET-Banca d'Italia's response to the Financial Stability Board's (FSB) 2017 Guidance on Continuity of Access to Financial Market Infrastructures (FMIs) for a Firm in Resolution.

This initiative, proposed at a 2019 workshop, aims to streamline information collection for resolution planning, reducing duplicative efforts.

FMIs are encouraged to publish their responses, providing baseline information to participants and resolution authorities.

A core objective of effective resolution is to maintain financial stability and the continuity of a bank's critical functions, necessitating continued access to critical FMI services like clearing, payment, settlement, and custody.

The guidance highlights three levels of access: valid FMI membership, ability to send new transactions, and capacity to use ancillary services.

This framework helps authorities and firms understand potential FMI actions during resolution and how FMIs can support resolution actions.

The questionnaire is structured into five parts, covering general FMI information, rulebook provisions on termination, actions prior to resolution during participant distress, measures during and after resolution, and operational processes for continued access.

This framework helps authorities and firms anticipate FMI actions and support resolution efforts.

The FSB emphasizes that FMIs retain the ability to terminate, suspend, or restrict participation if a firm fails to meet obligations or if FMI operations are compromised.

The responses are indicative, not firm commitments, and do not supersede existing contracts or rulebooks.

A disclaimer clarifies that the answers reflect TARGET operators' current thinking, based on the legal framework at the time, and should not be construed as industry standards.

Operators maintain discretion to safeguard TARGET's overall stability and safety.