Regulatory Alerts2023-07-31
FMI Standard 5: Collateral
The Reserve Bank of New Zealand and Financial Markets Authority jointly issued this standard to require designated financial market infrastructure operators to manage credit exposure through rigorous collateral management practices. Operators must accept only low-risk assets, apply conservative haircuts calibrated to stressed market conditions, and enforce strict concentration limits to prevent liquidation impairments. Additionally, the standard mandates robust mitigation of cross-border collateral risks and the implementation of well-designed, operationally flexible internal systems for ongoing collateral oversight.
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