Regulatory Alerts2023-07-31
FMI Standard 4: Credit Risk
The Reserve Bank of New Zealand and the Financial Markets Authority jointly issued FMI Standard 4 to mandate that designated financial market operators effectively measure, monitor, and manage credit exposures. The standard requires operators to maintain sufficient prefunded financial resources to cover participant defaults, with specific collateral and margin requirements for payment systems, securities settlement systems, and central counterparties. Central counterparties must additionally conduct rigorous daily and monthly stress tests to ensure their total financial resources remain adequate under extreme but plausible market conditions.
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