Financial market infrastructures and payment services report: how do the financial institutions supervised by the NBB manage different types of risk

Financial market infrastructures (FMIs) are critical to the smooth functioning of domestic and international financial markets and payment services. With many international FMIs, such as Swift, Euroclear, Mastercard Europe, and The Bank of New York Mellon hosted in Belgium, the country plays a key role in the global financial landscape. The National Bank of Belgium (NBB) is responsible for the oversight and supervision of these FMIs.

The NBB's Financial Market Infrastructures and Payment Services Report provides an overview of the roles played by FMIs, custodians, payment service providers and critical service providers, and of the NBB's supervision and oversight of these entities. It also highlights recent regulatory changes and the implications for supervision. In this context, the Bank is, for example, currently reviewing the oversight framework applicable to Swift in order to reflect the substantial regulatory and supervisory developments that have recently occurred in the FMI sphere.

This year's report focuses on different types of risks, including geopolitical risk, operational risk, ICT and cyber risk, and environmental and climate-related risks.

Among relevant geopolitical risks are those linked to the imposition of international sanctions on Russia in the wake of the war in Ukraine, and subsequent Russian countermeasures. Given that Euroclear holds the bulk of frozen Russian assets in the EU, the NBB closely monitors the risks to which this settlement institution is exposed.

In order to guarantee financial stability, the critical systems and entities covered by this report need to manage operational risk carefully. Digital operational resilience therefore continues to be one of the NBB's top priorities. The report provides an update on the EU Digital Operational Resilience Act (DORA), which aims to mitigate the risks associated with the digital transformation of the financial industry by imposing strict, common rules. These rules will apply to a wide range of financial institutions and critical ICT third-party service providers.

Environmental and climate-related risks have necessarily come under increased regulatory scrutiny of late. A themed article provides an update on these risks within the FMI landscape.

In 2023, the European Commission issued proposals for a new version of the Payment Services Directive (PSD3) and a Payment Services Regulation (PSR). These proposals are currently under discussion in the Council of the European Union and were an important focus area for the legislative work carried out under the Belgian presidency of the Council in the first half of 2024.

Finally, the report takes a look at the state of play of the digital euro project, which has entered a preparatory phase. The aim of this phase is to finalise the rules necessary for the creation of a digital currency and to analyse components of the future platform and related service providers.