UMAR FARUQUI | Member of Secretariat, Committee on Payments and Market Infrastructures, Bank for International Settlements (BIS)
JENNY HANCOCK | Member of Secretariat, Committee on Payments and Market Infrastructures, Bank for International Settlements (BIS)
COVID-19 has shone a light on how dependent we are on the financial market plumbing. Despite the sudden and extended move to remote working, the plumbing has generally continued to operate as expected. Typically, the expectation is that the plumbing is available at least 99.9 percent of the time, and if there is an incident that it is fixed within two hours. Despite the combination of remote working and heightened market activity, the number and duration of outages was largely unchanged.
In the early stages of the pandemic, increased volumes did lead to minor operational hitches and there were pressures from larger and more frequent margin calls at central counterparties – but generally the infrastructure continued to operate as expected. Nevertheless, COVID did bring to the fore a number of known challenges that require further consideration.
It will be important for the infrastructure and the relevant authorities to use the COVID-19 pandemic as an opportunity to learn and further improve the resilience of the financial market plumbing. If they do, users can go back to assuming that when we turn on the tap, financial assets will flow freely through the (financial market) plumbing as expected.