Taken together, we have made considerable progress in terms of the global regulatory regime to reflect the growing importance of FMIs and central counterparties (CCPs) within the financial system.

Let me briefly list a few of the accomplishments of the PFMI:
• They are now being globally adopted and implemented as mandatory, and the specific requirements themselves have been raised substantially. For example, there is a new, explicit liquidity standard to ensure that payments are made on time and in the right currency, and the cover 2 requirement for complex CCPs is much tougher than what came before it.
• They also provide greater detail and scope, including more detailed guidance with respect to CCPs and trade repositories (TRs).
• They are underpinned by a detailed disclosure framework, an agreed assessment methodology and a rigorous monitoring program to both promote consistency in how authorities have adopted and implemented the PFMI as well as, importantly, to promote consistency in outcomes.
• They provide greater harmonization to avoid regulatory arbitrage and race to the bottom behaviors.
• They include requirements and guidance for FMIs to implement their own viable recovery and orderly wind-down plans.

As I see it, great progress has been made, but there is more work to do in a number of areas:
• Greater harmonization and better cross-border mutual recognition practices;
• CCP recovery and resilience as well as coordination with other authorities to ensure incentives are aligned;
• Appropriate incentives for CCPs so that the profit motive does not conflict with having a safe system that can absorb large shocks without destabilizing the financial system; and
• Availability of data in TRs on a cross-border basis to facilitate the development of a more complete picture of market activities and emerging risks.

My third policy objective with a macroprudential component relates to central counterparties (CCPs). A key regulatory aim following the crisis, both in the United States and internationally, has been to encourage more derivatives and other financial transactions to be cleared through CCPs. There are important financial stability benefits to be gained from the progress that has been made toward this aim--including multilateral netting, standardized initial and variation margin requirements, and greater transparency.
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Notwithstanding the advances in CCP regulation, questions have been raised in international fora, in discussions among domestic financial and regulatory officials, and by some market participants over whether more needs to be done. To me, at least, some of the most important questions implicate macroprudential concerns. One discrete example is the possibility that CCP margining practices may have a significantly procyclical character that could be problematic in deteriorating financial conditions.

Of course, the other side of this coin is that concentrating risk in a central counterparty could create a single point of failure for the entire system. Given their heightened prominence in the financial infrastructure, if CCPs are to mitigate systemic risks they must hold themselves to--and be held to--the highest standards of risk management. In many respects, CCPs are the collective reflection of the financial institutions that are their members and the markets that they support.