Legal certainty brings confidence, and Principle 1 of the CPSS-IOSCO Principles for Financial Markets Infrastructures underscores the importance for FMIs to have a well-founded, clear, transparent, and enforceable legal basis for each material aspect of their activities.
The CPSS-IOSCO Principles further set out the five key considerations in order to fully comply with the first Principle, which are as follows: 1. the legal basis should provide a high degree of certainty for each material aspect of an FMI’s activities in all relevant jurisdictions; 2. an FMI should have rules, procedures, and contracts that are clear, understandable, and consistent with relevant laws and regulations; 3. an FMI should be able to articulate the legal basis for its activities to relevant authorities, participants, and, where relevant, participants’ customers, in a clear and understandable way; 4. an FMI should have rules, procedures, and contracts that are enforceable in all relevant jurisdictions.