The Financial Sector Assessment Program (FSAP) is an initiative jointly launched by the International Monetary Fund (IMF) and the World Bank in May 1999, building on lessons learned from the 1997 Asian financial crisis. It aims to strengthen monitoring and assessment of financial vulnerabilities in IMF member economies, reduce the occurrence of financial crises, and promote financial reform and development among its members.
FSAP generally evaluates financial structure and development, financial sector development, financial regulation, and financial infrastructure. The financial regulation assessment primarily evaluates financial regulation of a particular market against widely-adopted international standards for sectors such as securities, banking, and insurance. In terms of the financial infrastructure assessment, financial infrastructures will be evaluated against major international standards such as the CPSS-IOSCO Recommendations on Securities Settlement Systems (RSSS) and the CPMI-IOSCO Principles for Financial Market Infrastructures (PFMI). As of the end of 2025, CSDC has participated in three FSAPs jointly conducted by the IMF and World Bank on the People’s Republic of China.
1.CSDC in the First FSAP on China (2009-2012)
From August 2009 to November 2012, the IMF and World Bank conducted the first Financial Sector Assessment Program (FSAP) on China. During this assessment, the FSAP mission evaluated several key financial market infrastructures in China against the Recommendations on Securities Settlement Systems (RSSS) released by the Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) in November 2001. The evaluation covered aspects such as the legal framework, governance structure, operational processes, risk management, technical system management, efficiency and security, and supervision related to the securities settlement system. CSDC, as the operator of China’s securities settlement system, was included in this FSAP.
In April 2012, the IMF released the CPSS-IOSCO Recommendations For Securities Settlement Systems and Central Counterparties-Detailed Assessment of Observance - People’s Republic of China. In the report, the FSAP team evaluated the securities settlement system established between CSDC and the two exchanges, namely the Shanghai Stock Exchange and Shenzhen Stock Exchange, against the 19 recommendations of the CPSS-IOSCO Recommendations for Securities Settlement Systems (RSSS). It was concluded that the system observed or broadly observed 17 of the 19 recommendations. Nevertheless, it also highlighted the need for continued enhancements in areas such as DVP arrangements, CPSS-IOSCO disclosure, financial infrastructure supervision, and cross-border connectivity risk analysis.
2.CSDC in the Second FSAP on China (2016-2017)
From November 2016 to June 2017, the IMF and the World Bank conducted the second FSAP on China. After extensive interviews with the Chinese financial regulators and various market entities, the FSAP team identified issues for potential improvement and provided targeted recommendations on further improvement of China’s financial market. It ended with the release of a series of reports, including the Financial System Stability Assessment Report and the Financial Sector Assessment Report.
In December 2017, the IMF released the report People’s Republic of China: Financial System Stability Assessment. In June 2018, the IMF released the Systemic Oversight of Financial Market Infrastructures - Technical Note, which provided detailed analyses of the responsibilities, operational procedures, risk control measures, and regulatory frameworks of financial market infrastructures (FMIs) in China. The report noted that China had one of the world’s most complex and largest financial infrastructure systems and achieved significant progress in financial infrastructure regulation, particularly in implementing the CPMI-IOSCO Principles for Financial Market Infrastructures (PFMI) since the previous FSAP. Meanwhile, it also proposed recommendations for further improvements in areas such as systemic risk control, legal foundations, and settlement arrangements, including that “the China Securities Depository and Clearing Corporation Limited (CSDC) should improve its delivery versus payment (DVP) arrangements”.
CSDC highly values the FSAP recommendations and regards it as an important opportunity for a comprehensive evaluation of its capabilities and services against international standards. In 2019 and 2022, CSDC published PFMI self-assessment reports in implementation of the CPMI-IOSCO Principles for Financial Market Infrastructures (PFMI). Meanwhile, CSDC carefully studied the FSAP team’s recommendations for enhancing DVP arrangements and worked together with various market participants to promote reforms for achieving DVP in China’s securities market. On December 26, 2022, China’s capital markets officially implemented the DVP reform, further enhancing the safety and efficiency of its securities settlement system.
3.CSDC in the Third FSAP on China (2023-2025)
From July 2023 to April 2025, the IMF and the World Bank conducted the third FSAP on China’s financial sector. CSDC participated in and cooperated with the FSAP team during their on-site interviews. In January and February 2024, CSDC engaged in productive dialogues with FSAP teams. During these engagements, CSDC elaborated on the successful implementation of DVP reform in China’s capital markets since the previous FSAP, alongside an in-depth presentation of the current securities settlement arrangements in China.
In April 2025, the IMF released the Financial System Stability Assessment report on the People’s Republic of China, which acknowledged the notable progress made in China’s securities registration and settlement system since the previous FSAP, by noting that “in December 2022, the DVP principle was fully implemented in China’s securities market”. Moving forward, CSDC will remain dedicated to upholding international standards and continue our efforts in improving securities settlement and risk management, to establish ourselves as a financial market infrastructure that is safe, efficient, and resilient.
