Belgium: Financial Sector Assessment Program-Detailed Assessment of Observance-Assessment of the CPSS–IOSCO Principles for Financial Market Infrastructures Euroclear Bank

IMF Staff Country Reports, December 8, 2023

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Canonical URL: Belgium: Financial Sector Assessment Program-Detailed Assessment of Observance-Assessment of the CPSS–IOSCO Principles for Financial Market Infrastructures Euroclear Bank

Focus: detailed assessment of observance of the International Organization of Securities Commissions (CPSS–IOSCO) principles for financial market infrastructures.
Overall assessment: improvements noted since onboarding of the current Chief Information Security Officer, particularly to Euroclear’s cyber posture; nevertheless, critical deficiencies remain in the management of key operational risk elements that will require substantial efforts to address.
Key recommendations: increase transparency regarding direct participants’ clients; improve breadth and rigor of business continuity and default management testing; ensure the National Bank of Belgium (NBB) fully operationalizes the resolution plan for Euroclear Bank (EB).
Risk note: action to seize frozen assets at Euroclear because of international sanctions imposed following the Russian invasion of Ukraine could have unintended consequences for EB and the Euroclear Group more broadly.

Cyber posture: improvements since the onboarding of the current Chief Information Security Officer.
Remaining issues: critical deficiencies in management of key operational risk elements persist and require substantial remediation efforts.

Current approach: reliance on direct participant disclosure.
Recommendation: EB should develop capacity to increase transparency with respect to the business of its direct participants’ clients.

Current practice: existing testing of business continuity and default management.
Recommendation: EB should improve the breadth and rigor of testing by conducting simulation exercises based on well-defined scenarios.

Resolution planning: report suggests the National Bank of Belgium (NBB)—as the National Resolution Authority—should ensure that the resolution plan for EB is fully operationalized.
Sanctions-related risk: seizure of frozen assets at Euroclear due to international sanctions following the Russian invasion of Ukraine could have unintended consequences for EB and the Euroclear Group more broadly.