Data Protection Statement
By responding to this consultation, you provide personal data to the Bank of England. This may include your name, contact details (including, if provided, details of the organisation you work for), and opinions or details offered in the response itself.
The response will be assessed to inform our work as a regulator and central bank, both in the public interest and in the exercise of our official authority. We may use your details to contact you to clarify any aspects of your response.
The consultation paper will explain if responses will be shared with other organisations (for example, the Financial Conduct Authority). If this is the case, the other organisation will also review the responses and may also contact you to clarify aspects of your response. We will retain all responses for the period that is relevant to supporting ongoing regulatory policy developments and reviews. However, all personal data will be redacted from the responses within five years of receipt. To find out more about how we deal with your personal data, your rights or to get in touch please visit www.bankofengland.co.uk/legal/privacy.
Information provided in response to this consultation, including personal information, may be subject to publication or disclosure to other parties in accordance with access to information regimes including under the Freedom of Information Act 2000 or data protection legislation, or as otherwise required by law or in discharge of the Bank’s functions.
Please indicate if you regard all, or some of, the information you provide as confidential. If the Bank of England receives a request for disclosure of this information, we will take your indication(s) into account, but cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system on emails will not, of itself, be regarded as binding on the Bank of England.
Responses are requested by Monday 30 August 2021.
Please address any comments or enquiries by email to: FMIFees@bankofengland.co.uk
Alternatively, please send comments in writing to:
Financial Market Infrastructure Directorate
Bank of England
1.1 This consultation paper (CP) sets out proposals for the Bank of England’s (the Bank) supervisory fees for financial market infrastructure (FMI)footnote  for 2021/22. The proposals include:
- The fee rates to meet the Bank’s 2021/22 funding requirement (as set out in paragraph 1.4) for its FMI supervisory activity and the policy activity that supports this, as permitted by the Bank’s fee-levying powers;
- Outcome of 2020/21 actual costs incurred and impact on FMI fees charged for 2021/22.
1.2 This consultation is relevant to all FMIs that currently pay FMI supervisory fees to the Bank or are expecting to do so within the 2021/22 fee year.footnote 
Summary of proposals
1.3 The Bank’s annual FMI supervisory fee includes the costs of FMI supervision staff together with relevant policy support, specialist resources, corporate services and other costs associated with the work of the FMI Directorate. The landscape in which FMI supervision is undertaken has continued to change requiring further significant investment in the functions within the scope of the Bank’s fee levying powers. This includes; continued investment in the supervision of operational resilience and cyber risks, the impact from exiting the EU which has required increased work to manage adaptation to the new regulatory environment and to support interaction with EU authorities, work to ensure our supervision keeps pace with the changing payments landscape, and work associated with the development of our CCP stress testing regime. These factors affect each FMI category differently but in aggregate drive the increased costs this year. The total cost for the 2021/22 fee year of the Bank’s FMI supervisory activity and policy activity that supports this, and is within scope of the Bank’s fee-levying powers, is therefore expected to increase by 16% compared to the 2020/21 fee year.
1.4 As explained in the consultation paper last year, the Bank did not seek full cost recovery for 2020/21 as it agreed to phase in the 2020/21 cost increase over two years. This means that costs this year for all firms increase to capture the remainder of the 2020/21 cost increases as well as the increases expected this year. Therefore, the proposed fees for 2021/22 are expected to total £10.6 million. Overall, this is an increase in the fees levied of £1.5 million on the 2020/21 actual fees. This figure is provisional and may need to be revised at the end of the fee year. The final fee for 2021/22 will reflect the level of supervisory resource expenditure over the course of the year.
1.5 In the 2021/22 fee year, the Bank expects to recover approximately £0.39 million through a Special Project Fee (SPF), which is for supervisory work associated with a significant activity that is time limited and requires additional supervisory resource. The Bank has informed the relevant FMI(s) of its intention to recover these costs in addition to the annual FMI fee.
1.6 The proposals in this CP have been prepared under a number of resource assumptions, therefore, there may be variation in the final fee rates for the 2021/22 fee year. Any variances will be addressed at the conclusion of the 2021/22 fee year through either a rebate or a request for additional fees.
1.7 Finally, the SPF hourly rates remain unchanged from 2020/21. The rates are aligned with the Prudential Regulation Authority. The SPF hourly rates are published in our FMI fee policy documentation. The SPF will continue to follow a quarterly invoicing process.
1.8 The proposed implementation date for the proposals contained in this consultation is 2021 Q3, at which point invoices are expected to be issued for the 2021/22 fee year.
Responses and next steps
1.9 This consultation closes on 30 August 2021. The Bank invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to FMIFees@bankofengland.co.uk.
2: FMI fees for 2021/22
2.1 This section sets out proposals on FMI fee rates to meet the Bank’s 2021/22 funding requirement (as set out in paragraph 1.4) for its FMI supervisory activity and the policy activity that supports this, as permitted by the Bank’s fee-levying powers. The FMIs that are currently within scope of the annual FMI supervisory fee are recognised payment systems, specified service providers to recognised payment systems, UK CCPs, and UK CSDs. More information can be found on the Bank’s website. footnote 
2.2 The ratio for allocating fees between the different categories of FMIs remains the same as for the 2020/21 fee year and reflects the different challenges and resourcing requirements posed in supervising different types of FMI and their categories. The ratios of fees charged across the categories of FMI is set out in Table A.
Table A: Fee ratio across FMI categories (a)
CCPs - the ratio between category one, category two and category three CCPs
1.75 : 1.00 : 0.57
CSDs - the ratio between category one, category two and category three CSDs
1.50 : 1.00 : 0.67
Recognised payment systems and specified service providers - the ratio between category one and category two firms
1.50 : 1.00
- (a) The FMI categories are described as follows: Category one – most significant systems which have the capacity to cause very significant disruption to the financial system by failing or by the manner in which they carry out their business; Category two ‐ significant systems which have the capacity to cause some disruption to the financial system by failing or by the manner in which they carry out their business; and Category three – systems which have the capacity to cause at most minor disruption to the financial system by failing or by the manner in which they carry out their business.
2.3 The total FMI fees that are expected to be collected in the 2021/22 fee year are £10.6 million. Table B sets out the expected charge for each category of FMI.
Table B: Fees for 2021/22 fee year (a)
Payment systems and service providers
2021/22 FMI fees and comparison with 2020/21
2.4 The 2020/21 CCP fee-block charge is expected to increase by 17%, the payment system and service provider fee-block charge by 15% and the CSD fee-block charge by 13%. The increases are driven by a continued focus on and increased resource allocated to operational resilience and cyber risks, the impact of EU withdrawal (which has required an increase in policy work to develop the UK rule book and an increased supervisory capacity to manage the EU relationship as the new model of co-operation is settling in), work to ensure our supervision keeps pace with the changing payments landscape, and work associated with the development of our CCP stress testing regime. As noted above these factors affect each FMI category differently. The magnitude of the increases also reflect the phasing in of the 2020/21 fees as described above.
2.5 In the June 2018 Policy Statement on the ‘Fees regime for the supervision of financial market infrastructure’, the Bank stated that fees charged to FMIs could include work on special projects that fall under the Bank’s supervisory remit for FMIs and are in the scope of the Bank’s fee-levying powers. It also stated that it considers special projects to be one-off or significant activities that may be time limited and require additional supervisory resource. As a result of a time-limited and significant project that falls within scope of the fee-levying powers, the Bank intends to levy an SPF for the 2021/22 fee year and has discussed this bilaterally with the FMI(s) involved. It is expected that the Bank will recover approximately £0.39 million through levying this SPF in 2021/22.
3: Shortfall/surplus for 2020/21
3.1 As set out in the June 2018 Policy Statement, the Bank will set FMI fees based on the expected business-as-usual supervisory resource expenditure for the upcoming fee year.footnote  Where the Bank’s spend is greater or less than anticipated, the Bank will consider adjusting its annual supervisory levy for the following fee year to account for any under or overspends. Following a final review of supervisory resource allocation in 2021/22, no FMIs will receive a rebate on the fees that they paid in relation to the 2020/21 fee year. This is because in the 2020/21 fee year the Bank smoothed the increase from prior budget years, effectively capping fees at 50% of the budget increase. The chargeable fee buckets all came in higher than the effective fee cap amounts calculated from the smoothing approach agreed last year.
3.2 Invoices for the 2021/22 FMI supervisory fees will therefore not include a rebate from the 2020/21 fee year.
For the purposes of this policy statement, the term FMI refers to UK central counterparties (CCPs), UK central securities depositories (CSDs), recognised payment systems, and specified service providers to recognised payment systems.
The 2020/21 fee year began on 1 March 2020 and will end on 28 February 2021.