Scope
Financial market infrastructures include payment systems, securities settlement systems, central securities depositories, central counterparties and trade repositories. They are responsible for clearing and settling the financial transactions in a country. Their smooth operation is crucial for preserving financial stability. This is why they are overseen by central banks to ensure their proper functioning, boost their efficiency and security and support market initiatives towards these ends. Depending on the activity and scope of the particular infrastructure, the oversight function might be shared with other national or foreign authorities.
In addition to the aforementioned financial market infrastructures, retail payment instruments, schemes and arrangements (PISA) also play a significant role in the payment chain and, therefore, come under the Eurosystem’s oversight function. Furthermore, considering the increasing outsourcing of functions and the role of certain critical service providers, some stakeholders in the payment ecosystem may also be subject to direct oversight, depending on their importance.
Tools
Oversight is carried out by monitoring activity (including statistical and operational tracking, with a particular focus on monitoring major incidents and significant changes in infrastructures) and the risk management framework. Infrastructures are also assessed against specific objectives to ensure they are efficient and secure; changes are encouraged where needed. In certain cases, this oversight is carried out in cooperation with other national and international authorities.
The importance of payment systems
in the European financial ecosystem is reviewed periodically, distinguishing between: systemically important payment systems (SIPS), non-systemically important large-value payment systems (LVPS), prominently important retail payment systems (PIRPS) and other retail payment systems (ORPS). SIPS must comply with the European Central Bank’s Regulation on oversight requirements for SIPS and, when they have a pan-European reach, are subject to oversight via enhanced cooperation agreements.
Functions of the Banco de España
The Banco de España is tasked with overseeing the operation of payment and settlement systems, as stipulated in its Law of Autonomy. Oversight is also a key function of the Eurosystem, so the Banco de España’s activities extend beyond just Spanish payment systems to cooperating in the oversight of other systems in coordination with other central banks, applying consistent criteria in line with the frameworks established by the Eurosystem.
Moreover, Article 250 of Law 6/2023 of 17 March 2023 on securities markets and investment services states that, in accordance with international standards and European Union law on central counterparties, central securities depositories and other financial market infrastructures, the National Securities Market Commission (CNMV) and the Banco de España will ensure that the operation of national securities clearing, settlement and repository systems upholds the stability of the overall financial system. To achieve this, these authorities will assess how well Spanish securities market infrastructures adhere to best practices and international recommendations.
The oversight function complements other separate tasks, such as supervision, that may be carried out by the central bank or other institutions. The supervisory role of the Banco de España in the realm of financial market infrastructures includes supervising Iberpay, the company that manages the national electronic clearing system (SNCE). This encompasses both Iberpay’s internal rules and those relating to the SNCE and other services. The supervisory and sanctioning powers of the Banco de España have also been expanded to include the management of information and communication technology risk by payment system operators and other participants in the payment ecosystem, in accordance with Article 4 of Royal Decree-Law 8/2023.
The oversight and supervision activities carried out by the Banco de España are published regularly in the Supervision Report.