PFMI General Business Risk: CPMI-IOSCO’s Final LNAFE Guidance

On 14 October 2026 the BIS Committee on Payments and Market Infrastructures (CPMI) and the Board of IOSCO published their final report on FMIs’ management of general business risks and general business losses, a 29-page set of further guidance to Principle 15 of the Principles for financial market infrastructures (PFMI). The PFMI general business risk guidance is addressed to every FMI type and to the authorities that oversee them. It arrives eleven months after a CPMI-IOSCO peer review of 34 FMIs in 27 jurisdictions identified six serious issues of concern in how those FMIs size, fund and plan for losses that have nothing to do with a participant default.

The finding in that November 2025 Level 3 assessment with the clearest operational consequence was also the simplest. Some FMIs held liquid net assets funded by equity (LNAFE) equal to six months of current operating expenses and went no further, without calculating what it would cost to execute their recovery or orderly wind-down plans. The final guidance addresses that head on: six months is a floor, and each FMI is asked to compare it with the estimated cost of implementing its recovery and orderly wind-down plans, scenario by scenario, and to hold at least the greater of the two.

The report states that it creates no standards beyond those already in the PFMI and that it describes an acceptable way, though not necessarily the only way, of observing them. It asks each FMI, together with the authorities responsible for its regulation, supervision and oversight, to carefully consider the guidance when developing its approach to the PFMI. Neither the final report nor the BIS publication page and press release of 14 October 2026 sets an implementation date.

Related reading: CPMI-IOSCO Third-Party Risk at FMIs: The 1 December Deadline

PFMI general business risk guidance: status and timeline

The final report builds on four years of narrower work. CPMI-IOSCO first looked at this risk through a central counterparty lens: an August 2022 discussion paper on CCP practices to address non-default losses, informed by a stocktake of 20 CCPs in 10 jurisdictions, followed by an August 2023 report on current CCP practices that drew on the consultation responses. The Level 3 implementation monitoring exercise then widened the lens to all FMI types, and the consultative version of this guidance followed alongside its results.

The operative dates:

• April 2012: the PFMI published by the CPSS (now CPMI) and the IOSCO Technical Committee.
• August 2022: discussion paper on CCP practices to address non-default losses.
• August 2023: report on current CCP practices to address non-default losses.
• August 2023 to June 2024: Level 3 self-assessment questionnaire, with follow-up rounds in November 2023, January 2024 and June 2024.
• 7 November 2025: Level 3 assessment report and consultative report published together.
• 6 February 2026: consultation closed.
• 14 October 2026: final report published; the BIS consultative report page now lists 13 published responses.

The report explains why it moved beyond CCPs. The principles it elaborates apply to all FMIs, general business losses matter for FMIs that face no credit or liquidity risk from members at all, and several respondents to the 2022 consultation asked for consistent guidance across FMI types. A trade repository or a securities settlement system therefore reads the same text as a derivatives CCP.

The status language deserves a careful read before anyone builds a gap analysis on it. The report says it supplements other guidance, naming the Recovery guidance and the CCP resilience guidance, without altering it. Its worked examples are “not meant to be prescriptive or exhaustive”. And it uses three different verbs. Paragraphs phrased “an FMI should” read as the guidance’s core expectations, while “an FMI should consider” and “could” mark options. A gap register that flattens all of them into requirements will overstate the work, and one that treats the whole report as optional commentary will miss the parts that restate the PFMI key considerations themselves, such as the board-approved equity plan in key consideration 5.

What counts as a general business loss under Principle 15

Principle 15 covers the risk of losses arising from an FMI’s administration and operation as a business enterprise that are neither related to participant default nor separately covered by financial resources under the credit or liquidity risk principles. The April 2012 PFMI already explains that general business risk includes an impairment of the FMI’s financial position arising from falling revenues or rising expenses, where expenses exceed revenues and the resulting loss is charged against capital. Poor execution of business strategy, negative cash flows and unexpected, excessively large operating expenses are the PFMI’s own examples.

CCPs commonly say “non-default losses”; the report uses “general business losses” so that payment systems and CSDs recognise themselves in it, and it states that the two terms cover the same scope of losses.

The scope also covers inherited risks. An FMI can incur general business losses when risks governed by other principles materialise despite its controls. The report gives three examples:

• Legal risk (Principle 1): a lawsuit producing judgments or fees borne by the FMI, even where its legal basis is sound.
• Custody and investment risk (Principle 16): a CSD, custodian or cash correspondent failing to safeguard the FMI’s assets, including assets in transit.
• Operational risk (Principle 17): cyber events, natural disasters or terrorist attacks causing outages, damage to physical assets or higher expenses.

The division of labour is precise. Principles 1, 16 and 17 set the standards for identifying and managing those risks; Principle 15 sets the standard for absorbing the financial loss if they crystallise anyway. The report gives no additional guidance on Principles 1, 16 or 17 themselves. It does tie Principle 15 to three others: Principle 2 on governance, Principle 3 on the risk-management framework and recovery planning, and Principle 23 on disclosure.

The Level 3 assessment found divergence on exactly this point. Some FMIs did not classify some or all of these loss types as general business risk at all. An FMI that books a cyber theft purely as an operational risk event, with no loss estimate feeding its Principle 15 resources, would leave a gap in its LNAFE sizing however good its cyber controls are. Recovery tools are under supervisory scrutiny elsewhere too: ESMA’s sixth CCP stress test, launched on 30 April 2026, includes for the first time a recovery and resolution component assessing the aggregate effects of CCPs’ recovery and resolution tools on stakeholders, as our ESMA 6th CCP stress test explainer sets out.

Building the general business risk profile

Section 3 of the report asks each FMI to embed five processes in the general business risk component of its risk-management framework, supported by documented policies and procedures. The combination of identified risks, existing controls and loss estimates is what the report calls the general business risk profile, and almost everything in the LNAFE section later depends on it.

Identification: internal, external and inherited sources

Internal sources are the FMI’s own business model and operations; the report’s examples are weak take-up of new products and unsuccessful technology upgrades. External sources sit outside the FMI’s operations, such as sudden increases in wages, property costs or third-party service costs, or significant revenue reductions as the business environment changes. Dependencies on third parties appear explicitly in the list of potential sources, and the report’s cyber example covers attacks on service providers’ systems as well as the FMI’s own. That links this workstream to the separate CPMI-IOSCO work on cyber resilience; our CPMI-IOSCO cyber resilience toolkit review covers the four voluntary tools on governance, scenarios, recovery and testing.

Two further points are easy to underweight. An FMI should consider that different risks could materialise at the same time, and should also consider looking ahead for new risks or new ways existing risks may show up. On method, the report suggests considering an integrated risk taxonomy and a risk and control self-identification process. A footnote qualifies this: reusing an operational risk taxonomy is acceptable, but the FMI should recognise that it may not capture all general business risks and should have a process for the rest.

Mitigation and the conservative-assumptions rule

Mitigation comes in three forms in the text: avoiding a risk (declining or exiting a high-risk venture), reducing it (stronger controls, better processes, staff training) and transferring the loss (insurance, or explicit indemnity agreements from parents, owners or participants). The guidance then asks for conservative assumptions about every one of those tools.

Insurance gets the most specific treatment. The FMI should watch for timing mismatches between when a loss must be absorbed and when the insurer pays, because that gap may reduce the liquid resources available when the loss falls due. Where a tool depends on a third party acting, the FMI should assess performance risk and address it. Using several tools is encouraged. An FMI may also accept and retain some risks if they fit its risk tolerance policy, and the report is candid that residual risk can never be fully eliminated.

Estimating size and timing

The report names four tools: historical loss data, loss distribution models, scenario analysis and sensitivity analysis. It is realistic about the first two. Where an FMI lacks its own loss history it should consider external data from other FMIs, institutions or vendors, and loss distribution models may struggle for lack of data, so the FMI should consider supplementing them with other tools. Scenario analysis is singled out for events that are hard to model and can produce outsized losses, calibrated across a spectrum of severity, with attention to how one event spawns several loss types: an operational failure first, litigation later.

Consultation responses show how unsettled this still is. ISDA and FIA, writing for buy-side and sell-side members, said they were unaware of any general business loss data usable to build historical loss distributions and called scenario analysis combined with expert judgment the only practical approach for now. CCP Global, for its members, also stressed that expert judgment is necessary given limited historical data. The final text adds proportionality: the rigour of the estimate would depend on the loss scenario, and more rigorous approaches are important for material losses, especially those that could threaten viability. Whatever the method, the FMI should document both conclusions and methodology; the report’s examples of what the methodology record could cover are assumptions, data sources, limitations and the degree of expert judgment used. It may also bring in external experts to challenge its assumptions.

Monitoring closes the loop. Beyond regular review of the profile and the resources behind it, an FMI should consider key risk indicators with thresholds tied to its risk tolerance policy. The final text adds an example the draft lacked: indicators built on revenue and expense metrics, with thresholds stepping up monitoring, escalation or the deployment of risk management tools.

LNAFE: liquid assets and equity, each at least equal to the requirement

LNAFE has two aspects, and the guidance treats them as two separate tests. At all times, an FMI should have on its balance sheet liquid assets and equity that are each equal to or greater than its required amount of LNAFE. On that logic, a large cash balance funded by long-term debt would not satisfy the equity side, and ample equity tied up in illiquid assets would not satisfy the liquidity side.

On the asset side, the PFMI ask for high-quality, sufficiently liquid assets such as cash, cash equivalents or liquid securities. The guidance adds operational detail:

• Assets counted should be free of liens and encumbrances and accessible promptly when required.
• Where they must be sold, they should be convertible with little to no loss in value within the time frame the FMI’s loss scenarios require.
• The FMI should assess quality and liquidity on an ongoing basis, considering market, credit, custody and currency risk.
• Publicly traded securities held as LNAFE should be marked to market regularly and frequently, with haircuts for market risk.
• Term deposits should be assessed by when the money would actually be available, including any early-withdrawal reductions.
• The composition should allow obligations to be met promptly, in the proper currency where relevant.

On the equity side, the guidance wants capital that is fully loss-absorbing and usable without relevant restrictions, such as common stock, disclosed reserves or retained earnings. Liabilities do not qualify, even long-term ones, because equity can absorb losses on an ongoing basis and is permanently available. Where an FMI’s corporate structure means it cannot legally or institutionally raise equity, a footnote points to the PFMI explanatory note: it should ensure an equal amount of equivalent loss-absorbing resources is available.

The Level 3 assessment shows why spelling this out was necessary. The PFMI never define LNAFE, and the 34 participating FMIs read the term differently. Around half defined it in terms of either liquid assets or equity, some used both, and a few defined it through balance sheet items such as current assets less current liabilities. Only a few FMIs said they regularly assess whether the assets held as LNAFE are of high quality and sufficiently liquid. A working-capital measure of that kind does not map onto the two-sided test the final guidance describes.

Sizing LNAFE: the recovery-cost estimate against the six-month floor

Section 4.2 is the operational core. An FMI should conduct a thorough analysis of the LNAFE it needs at all times to implement its recovery and orderly wind-down plans. For each identified scenario relevant to its general business risk profile, it should estimate the full range of costs: ordinary operating expenses, extraordinary expenses linked to recovery and wind-down, and any losses it would need to cover with LNAFE after taking account of other recovery tools. It should then hold LNAFE sufficient for the scenario that generates the greatest need, including the cost of moving from a failed recovery into orderly wind-down where appropriate, and compare that figure with six months of current operating expenses, holding at least the greater of the two.

Paragraph 4.2.9 lists six elements that drive the scenario cost:

Two exclusions frame the calculation. Resources held for purposes other than general business losses, such as default resources or funds earmarked for strategic initiatives and investments, should be determined separately from LNAFE. And, citing the Recovery guidance, an FMI should not expect public funds to be made available to maintain its viability.

The six-month figure, for its part, is a standardised floor designed to be calculated the same way for every FMI regardless of type or risk profile. The report says plainly that calculating and holding six months of current operating expenses is no alternative to costing the recovery and wind-down plans. That sentence speaks directly to the second serious issue of concern in the Level 3 report, where some FMIs simply used the six-month minimum, and a few held static buffers above it without testing whether the result would fund their plans.

Two calculations, kept apart

The guidance insists that the six-month calculation is separate and independent of the plan-cost estimate. A model that blends the two loses that independence, so the contrast is worth setting side by side:

For FMIs inside a larger reporting entity whose financial statements do not show the FMI separately, the six-month figure should at a minimum include the FMI business line’s own operating expenses plus the shared expenses of the larger entity allocated to it, such as technology, data centres, telecoms and shared legal, risk, audit or back-office staff. If the FMI cannot separate its share, it should consider whether to include the full amount of the larger entity’s operating expenses. A footnote adds a forward-looking adjustment: where the FMI foresees significant and lasting increases in business-as-usual expenses from structural changes, it should consider reflecting them.

One open question survives into the final text. The Level 3 assessment found that many FMIs used historical figures from audited financial statements, others used forecasts or budgets, and some adjusted their historical numbers. The final guidance anchors the figure to current business-as-usual expenses updated on a rolling basis and names no preferred source, which leaves the choice of input to the FMI and its authority.

Testing, review and buffers above the minimum

The Recovery guidance calls for recovery plans to be tested and reviewed at least annually and after changes that would materially affect them. The new guidance asks that testing cover the plan’s general business loss elements, which may include the tools the plan relies on, and that the cost estimate be reviewed and updated as part of each regular plan review. An FMI should also consider updating the estimate after any significant change in underlying assumptions; the report’s examples are new or revised scenarios, a change in the availability of substitutes for its critical services, and a large rise in particular costs.

The report then asks FMIs to consider holding LNAFE above the minimum. Operating expenses can jump between financial statement periods, the risk profile can shift before the next recalculation, and non-cash assets can lose value. There is also a strategic reason: resources above the minimum, sized against the FMI’s risk appetite, could let it absorb some losses without having to invoke its recovery plan at all.

Equity-raising plans and recovery triggers

Principle 15, key consideration 5, already requires a viable plan for raising additional equity should equity fall close to or below the amount needed, approved by the board and updated regularly. The guidance defines viable as a plan that can be expected to raise equity in the necessary amount and time frame. To get there, an FMI should assess the suitability of specific methods against its ownership structure, its legal framework and the scenarios in which it might need capital, weighing the size of the potential shortfall and how quickly and how likely it can be filled in the market conditions likely to prevail at the time. The plan should state its assumptions and be reviewed and approved by the board.

The remaining points are concrete. The first three are phrased as expectations; sequencing is something an FMI could consider, and in the last item the guidance expects specific steps but asks the FMI to consider the actions, roles and triggers:

• Pre-arranged mechanisms with owners, participants or debt holders, to the extent feasible and practicable.
• A careful assessment of whether any ad hoc option is reliable and credible.
• No reliance on prospective public sector funding for recapitalisation.
• Thought about sequencing and interaction between methods; the report’s example is that cutting dividends may reduce valuation and make new equity more expensive.
• Specific steps, internal and external actions such as regulatory approvals, decision-making roles and triggers for launching the plan.

The report explains why equity raising can be harder to plan for here than in a default context. Recovery from general business losses would normally require raising equity, either to absorb losses or to replenish capital, and recapitalisation may not rest on prefunded or committed tools. Challenges in raising capital within the needed time frame may therefore be more likely, which is why the guidance emphasises early engagement of senior management and the board.

The Level 3 findings show the starting point. Some FMIs maintained no explicit equity plan and would rely on ad hoc approaches such as optional contributions from a parent. Most participating FMIs said they had no ex ante arrangements for raising additional capital, although the Level 3 report describes capital raising as an essential recovery tool foreseen by FMIs, and the majority of FMIs with equity plans expected to depend mainly on voluntary contributions from new or existing shareholders.

Triggers connect all of this to time. An FMI should develop clear qualitative and quantitative triggers for its recovery and orderly wind-down plans in a general business loss context, leaving appropriate discretion to senior management and the board, and should consider early warning indicators that start information-sharing and escalation early enough to matter. Triggers should be calibrated so the relevant plan begins while LNAFE is still sufficient to implement it. The Level 3 report described one FMI’s traffic-light system, with orange marking the early warning limit and red marking recovery, and noted that a few FMIs use LNAFE falling below six months of operating expenses, or the local regulatory level, as a recovery trigger. A trigger set at the floor itself sits uneasily with the calibration language, because by the time it fires the buffer the plan depends on may already be spent.

Board oversight, stakeholder input and disclosure

The governance section draws a line between management, which manages general business risks day to day, and the board, which is ultimately responsible for establishing and overseeing a clear, documented risk-management framework that includes them, covering risk tolerance, accountability for risk decisions and decision-making in crises. The board should provide effective challenge to management’s identification of risk sources, its loss estimates and its assumptions about mitigation, and should oversee the LNAFE determination, the quality and liquidity of assets held and the equity plan. Material decisions with a significant effect on the risk profile should be approved by the board, and the board needs timely information because recovery tools in this context may take time to deploy.

Stakeholders are the FMI’s direct and indirect participants, linked FMIs and others likely to be affected. The guidance suggests consulting them when the FMI develops, tests and updates its processes, seeking input on the sufficiency of resources and on tools, and especially where a tool would require their participation. The final text adds committees that include participants as one channel for regular engagement, and suggests involving stakeholders in testing procedures that depend on them.

Disclosure runs through Principle 23. An FMI should disclose enough about its approach to general business risk for participants to understand the risks, fees and other material costs of participating. The final text bounds that duty: disclosure goes only as far as it does not undermine the integrity of the FMI’s business operations or override legitimate confidentiality interests, and the FMI should consider how to balance the two so that confidentiality does not block the disclosures participants need. Disclosures may be tailored by audience; the report’s example is information shared only with participants under non-disclosure agreements. For rules and tools that affect participants, the guidance asks for ex ante specification in disclosed rules, which supports enforceability and reduces the chance that actions are voided, reversed or stayed. It suggests disclosures cover:

• how the financial impact of a general business loss is estimated;
• the rules, tools and procedures for addressing such losses and how they may affect stakeholders;
• where applicable, the criteria and parameters used for different loss types;
• when affected stakeholders would be notified and when any payment obligations could fall due; and
• the governance process for activating those rules, tools and procedures.

Participant loss allocation is where respondents split. ISDA and FIA argued that general business losses should typically not be allocated to participants and that variation margin gains haircutting should not be used for them, while noting that their paper did not reflect the views of many CCPs. The final text handles it through process. It still lists explicit indemnity agreements from parents, owners or participants among the ways an FMI may transfer losses, and deals with participant-facing tools through stakeholder involvement and disclosure. Clearing members comparing CCPs will find this sits alongside the separate CPMI-IOSCO push on margin transparency covered in our CPMI-IOSCO initial margin disclosure guidance article.

What changed from the November 2025 consultative report

Neither the report nor its BIS page lists the changes made after consultation; the page says only that respondents expressed a range of views. Comparing the two texts directly, the architecture survived intact. The differences are in clarification and in the disclosure section:

Two consultation threads did not make it into the final text. The consultative report asked whether the guidance should distinguish operating from non-operating losses when determining minimum LNAFE; the final report contains no such split. ISDA and FIA asked for the six-month minimum to rise to 12 months and for a minimum set of loss scenarios every FMI would have to model; the final text keeps the six-month floor from key consideration 3 and keeps its scenario examples non-prescriptive.

How authorities and local rulebooks pick this up

The PFMI reach FMIs through national implementation: in line with G20 expectations, CPMI and IOSCO members have undertaken to incorporate the Principles and Responsibilities into their legal and regulatory frameworks. Under Responsibility D, it is the relevant regulatory, supervisory and oversight authorities that should ensure the principles are observed by individual FMIs, and the Level 3 report reminded authorities that they are expected to ensure consistent application in their jurisdictions. The PFMI explanatory note on Principle 15 already contains a reporting hook, quoted in that report: to ensure the adequacy of its own resources, an FMI should regularly assess and report its LNAFE relative to its potential business risks to its regulators. Neither Principle 15 nor the final report prescribes a harmonised regulatory LNAFE return, so the format, frequency and content of that reporting come from the relevant jurisdictional framework, alongside existing public disclosure standards such as the CCP public quantitative disclosures.

How closely local rules already track Principle 15 varies, and two published sources illustrate the range. A CPMI-IOSCO Level 2 assessment dated April 2026 covers the UK framework for payment systems and CSDs/SSSs, reflecting the position at 30 September 2023. For CSDs and SSSs, implemented through UK CSDR and the onshored technical standards 2017/390 and 2017/392, it rated Principle 15 broadly consistent but found a lack of specificity in linking requirements for restructuring to the recovery plans CSDs must have, and recommended that UK authorities address the gaps on key considerations 2 and 3. Whether capital held for restructuring matches what a recovery plan would cost is the same question the new guidance’s plan-cost estimate is built around. Our BoE-FCA FMI supervision MoU article explains how UK FMI supervision is divided.

In the United States, 17 CFR §39.39(b) (April 2025 annual edition) requires systemically important and subpart C derivatives clearing organisations (DCOs) to maintain viable plans for recovery or orderly wind-down arising from uncovered credit losses or liquidity shortfalls and, separately, plans addressing general business risk, operational risk or other threats to viability. Under §39.39(d)(2), the latter plans must be supported by sufficient unencumbered liquid financial assets funded by owners’ equity. Section 39.39 says the financial resources required under section 39.11(a)(2) may in general be sufficient, but each such DCO must analyse its own circumstances, hold any additional resources needed and include evidence and analysis supporting the amount. Section 39.40 states that the subpart is intended to be consistent with the PFMI.

CCP Global’s response warned that jurisdictions have implemented the PFMI in different ways, sometimes going further, and that new guidance could interact with local regulation in unhelpful or unintended ways. That is the practical reason to read the final report against the local rulebook clause by clause.

Frequently Asked Questions

Does the LNAFE guidance apply to FMIs operated by central banks?

The Level 3 report states that key considerations 2 to 5 of Principle 15, which cover LNAFE, plan funding, asset quality and the equity plan, do not apply to central bank-operated FMIs, and none of the 34 assessed FMIs was central bank-operated. The final report points to the 2015 CPMI-IOSCO report on applying the PFMI to central bank FMIs for that treatment.

Our FMI is also a bank and holds capital under Basel-based rules. Must LNAFE be held on top of that?

Key consideration 3 makes LNAFE additional to resources held for participant defaults and other financial-resources risks, but it also allows equity held under international risk-based capital standards to be included where relevant and appropriate to avoid duplicate capital requirements. The final report quotes that proviso and adds no conditions of its own, so what counts as “relevant and appropriate” is left to the FMI and its authority.

What if our legal form means we cannot issue equity?

The guidance cites the PFMI explanatory note: where an FMI’s corporate structure means it cannot legally or institutionally raise equity, it should ensure that an equal amount of equivalent loss-absorbing financial resources is available.

Do insurance policies count toward LNAFE?

The guidance treats insurance as a loss-transfer tool, separate from LNAFE, which it defines through liquid assets and equity on the FMI’s balance sheet. Insurance can instead affect how much LNAFE is needed, because the timing and reliability of claims payments feed into the assessment of recovery tools.

We have no realistic substitute in our market, so wind-down looks impossible. Can we rely on the recovery plan alone?

The Level 3 report recorded exactly that argument: a few FMIs said wind-down would be difficult or impossible because of a monopoly position, a lack of alternative providers or legal obstacles, and a few said wind-down was covered by resolution or made unnecessary by recovery planning. It still classed the absence of an orderly wind-down plan addressing general business risk as a serious issue of concern. The final guidance expects plans and LNAFE sufficient to execute recovery and, if recovery fails, to transition to orderly wind-down, and a footnote gives, as one example, a wind-down strategy of continuing critical services until participants can move to an alternative, with the time needed depending on factors such as substitutes, membership overlap and the ease of re-papering contracts.

We call these non-default losses in our rulebook. Do we need to rename them?

The guidance does not ask for one. A footnote states that using “NDL” or “non-default losses” is not discouraged for any FMI or authority. What matters is that the losses captured match the scope set out in section 2 of the report, including losses from legal, custody, investment and operational risk events.

Do we have to publish our LNAFE calculation?

The CPMI-IOSCO Public quantitative disclosure standards for central counterparties, published in February 2015, already call for CCPs to disclose annually, under item 15.1, both the value of liquid net assets funded by equity available to absorb general business losses and six months of current operating expenses. This is distinct from publishing the full scenario-by-scenario LNAFE calculation. The enforceability of these standards and any additional disclosure obligations depend on the applicable jurisdictional framework. On the LNAFE determination itself, the final guidance says that an FMI may consider providing participants with information on it and on any additional financial resources it holds for general business losses. For other FMI types, disclosure obligations follow from Principle 23 and applicable local rules.

Related Articles

• CPMI-IOSCO Third-Party Risk at FMIs: The 1 December Deadline: the six third-party challenges CPMI-IOSCO set out under PFMI Principle 17 and the consultation timetable.
• CPMI-IOSCO Cyber Resilience Toolkit: What FMIs Should Review: the four voluntary tools on cyber governance, scenarios, recovery and testing for FMIs.
• ESMA 6th CCP Stress Test: What Clearing Members and Reporting Teams Should Expect: the credit, concentration, reverse stress and first-time recovery and resolution components of ESMA’s sixth CCP stress test.
• CPMI-IOSCO Initial Margin Guidance: Simulators, Overrides, New PQDs: proposed margin simulators, model disclosures and new public quantitative disclosure metrics for CCPs.
• Guarantees as CCP Collateral: What ESMA’s Draft RTS Changes: the EMIR 3 conditions for guarantees as CCP collateral and the widened CCP investment rules.
• FSB Cross-Sectoral Resolution Planning: The ReSolve Signal for Banks: how the FSB’s cross-sectoral resolution planning agenda bears on crisis-readiness governance.

Key Takeaways

• Build one LNAFE worksheet per identified scenario, so the greatest-need scenario, including any transition to wind-down, can be compared with the six-month figure at each update.
• Test the balance sheet twice: unencumbered liquid assets against the requirement, then fully loss-absorbing equity against the same requirement.
• Route legal, custody, investment and operational loss scenarios into the Principle 15 estimate, whichever risk function owns the control.
• Keep the six-month calculation free of crisis adjustments and recovery time; for group-hosted FMIs, include allocated shared costs or consider the full entity’s expenses.
• Write pre-arranged capital mechanisms, regulatory approval steps and launch triggers into the board-approved equity plan; recovery planning should not assume public funds will be made available to maintain the FMI’s viability, and any ad hoc funding option needs a reliability assessment.
• Check whether any recovery trigger sits at the six-month floor itself, and test it against the guidance’s calibration standard, under which triggers should let the relevant plan start while LNAFE is still sufficient to implement it.
• The final report, its BIS publication page and the press release set no implementation deadline and no reporting template; any regulatory LNAFE reporting follows the applicable local framework.

Sources and References

• CPMI and IOSCO, FMIs’ management of general business risks and general business losses: further guidance to the PFMI, final report, 14 October 2026: BIS publication page; BIS PDF; IOSCO PDF (IOSCOPD830)
• BIS media release, Global standard-setting bodies publish final report on guidance for FMIs on general business risks and general business losses, 14 October 2026: bis.org
• CPMI and IOSCO, FMIs’ management of general business risks and general business losses: further guidance to the PFMI, consultative report, 7 November 2025, with published consultation responses: BIS publication page; consultative report PDF
• CPMI and IOSCO, Implementation monitoring of the PFMI: Level 3 assessment on general business risks, 7 November 2025: BIS page; report PDF
• BIS media release, Global standard-setting bodies publish an assessment report and a consultative report, 7 November 2025: bis.org
• CPSS and IOSCO, Principles for financial market infrastructures, April 2012: BIS page; IOSCO PDF
• CPMI and IOSCO, Recovery of financial market infrastructures, revised July 2017: bis.org
• CPMI and IOSCO, Public quantitative disclosure standards for central counterparties, February 2015: iosco.org
• CPMI and IOSCO, Report on current central counterparty practices to address non-default losses, August 2023: bis.org
• CPMI and IOSCO, Application of the Principles for financial market infrastructures to central bank FMIs, August 2015: bis.org
• ISDA and FIA, response to the CPMI-IOSCO consultative report, submitted 5 February 2026: bis.org
• CCP Global, response to the CPMI-IOSCO consultative report, 6 February 2026: bis.org
• CPMI and IOSCO, Implementation monitoring of PFMI: Level 2 assessment report for the United Kingdom (payment systems and CSDs/SSSs), April 2026: bis.org
• CPMI and IOSCO, Cyber resilience toolkit: practical considerations for FMIs, consultative document, 8 September 2026: bis.org
• ESMA, ESMA launches its sixth stress test exercise for Central Counterparties, 30 April 2026: esma.europa.eu
• 17 CFR Part 39 (CFTC, derivatives clearing organizations), sections 39.39 and 39.40, April 2025 annual edition: govinfo.gov

Before the Next Recovery Plan Test

The July 2017 CPMI-IOSCO Recovery Guidance states that FMIs subject to the PFMI recovery-planning standards should test and review their recovery plans at least annually and following material changes. For the next review, a useful evidence pack is the scenario-by-scenario LNAFE calculation, the board-approved equity plan and the triggers that would activate recovery arrangements.

Disclaimer: The information on RegReportingDesk.com is for educational and informational purposes only. It does not constitute legal, regulatory, tax, or compliance advice. Always consult your compliance officer, legal counsel, or the relevant supervisory authority for guidance specific to your institution.