Plumbing in financial markets unprepared for rapid recovery, authorities warn
In particular, the regulatory review – which examined 38 financial market infrastructures (MFIs) in 29 jurisdictions – found that MFI recovery plans in the event of disasters, such as a natural disaster or major systems failure, did not meet expectations.
“The business continuity management of some, and potentially many MFIs, does not appear to aim to resume operations on time, including in the event of a large-scale or major disruption,” regulators said.
The review noted that IT systems should be able to be restored within two hours of a major incident, and that MFIs should be able to settle transactions before the end of the day of the disruption, even under “extreme circumstances.” .
“Given that this is a serious matter of concern, CPMI and IOSCO expect that affected MFIs and their [regulators] to treat this as a matter of the highest priority, ”the review said.
MFIs have generally weathered the pandemic without serious disruption, he added, switching to remote work and maintaining critical functions.
“Although the Covid-19 pandemic did not cause service disruptions, it presented some operational challenges,” the report notes. For example, the large transaction volumes at the start of the pandemic posed challenges for some MFIs.
The episode also “highlighted operational risks posed by third parties such as critical service providers,” and the pandemic has also heightened cybersecurity risks, according to the report.