Central Bank To Tighten Regulatory Focus On Jamaican Payment Systems

The Central Bank of Jamaica (BOJ) has confirmed it will abide by the Principles for Financial Market Infrastructures (PFMIs). Regionally operated payment systems in Jamaica will consequently be regulated more closely.

Any kind of financial company operating in Jamaica that facilitates financial transactions — including central counter parties and trade repositories, securities settlement systems, and central securities depositories — will be more thoroughly monitored by the BOJ.

A Financial Market Infrastructure is defined by the Jamaica Observer as “a multilateral system among participating institutions, including the operator of the system, used for the purposes of clearing, settling, or recording payments, securities, derivatives, or other financial transactions.”

The BOJ’s actions adhere to international best practices and reports its “oversight framework is being revised based on the experience gathered, and taking into account the standards issued by the Committee on Payment and Settlement Systems and the International Organization of Securities Commissions.”

The bank explicated that FMIs are crucial to Jamaica’s financial system and the country’s broader economy, contributing to overall financial growth. FMIs improperly regulated and governed could pose significant challenges to enhancing stability.

The BOJ stated that “the principles are designed to ensure that the financial market infrastructures supporting global financial markets are robust and well-placed to withstand financial shocks. The overall objective is to ensure that financial market infrastructures promote safety and efficiency in payment, clearing, settlement, and recording arrangements, and more broadly, to limit systemic risk and foster transparency and financial stability.”

The PFMI, critical to the oversight of FMIs, are defined as broad principles due to degrees of  difference among FMIs and provide applicable guidance to FMIs and government authorities to assess a full range of risks FMIs pose.

They include multiple responsibilities for central banks, market regulators, and other relevant authorities supervising the Jamaican financial markets.