FinTech Global Regulatory Round-up – w/e 12 November 2021

BCBS: Technical amendment to G-SIB assessment methodology and update on workstreams

The Basel Committee on Banking Supervision (BCBS) has published a technical amendment to the process for reviewing the assessment methodology for global systemically important banks (G-SIBs). The amendment involves the replacement of the existing three-year review cycle of the methodology with a process of ongoing monitoring and review in order to ensure that it remains appropriate over time. The amendment follows a consultation earlier this year.

The BCBS has also provided updates on its work regarding climate-related financial risks, the prudential treatment of banks' cryptoassets exposures and disclosure standards. The BCBS plans to consult on these areas in the coming months and next year. [9 Nov 2021]

#Cryptoassets

BIS: Speech on interoperability in payments

The Bank for International Settlements (BIS) has published a speech by Agustín Carstens, General Manager of the BIS, on interoperability in payments. In his speech, Mr Carstens spoke about the reasons preventing payment systems from being interoperable, including:

• systems may use different technical standards, communication protocols, and supporting hardware and software infrastructure;
• issues around data and semantics; and
• the business rules governing payments systems.

He also spoke about the work that the BIS Innovation Hub is doing to facilitate interoperability. [8 Nov 2021]

#Interoperability

HoL Communication and Digital Committee inquiry into digital regulation – DRCF response

The FCA has published a statement to highlight that following its 2 November appearance with other members of the Digital Regulatory Cooperation Forum (DRCF) to give evidence to the House of Lords (HoL) Communication and Digital Committee inquiry into Digital Regulation, the Committee has published the DRCF's written evidence. The written evidence sets out the background to the establishment of the DRCF, explains work undertaken to date, and outlines future plans. [12 Nov 2021]

#DRCF

LSB: Hot topics and developments

The Lending Standards Board (LSB) has published the contribution made by Anna Roughley, Head of Insights, to a panel session at the Credit & Collections Technology Think Tank. Ms Roughley identified five hot topics which the industry should be focusing on:

• ensuring products and delivery are suitable for all;
• approaching engagement and operations in a remote working environment;
• the importance of culture in this new remote working environment;
• adapting to changes in underwriting and collections; and
• how cross-sector engagement could improve outcomes.

Ms Roughley also set out three areas for development:

• the use of self-regulation to mitigate risk in emerging areas and uphold practice standards;
• greater emphasis placed on education and financial rehabilitation; and
• proactive identification of additional needs in the digital space. [10 Nov 2021]

BoE/HMT/HoC: Next steps on UK CBDC

The BoE and HM Treasury (HMT) have published a statement setting out the next steps on the exploration of a UK central bank digital currency (CBDC). The statement notes that the BoE and HMT will consult on a UK CBDC in 2022. The consultation will evaluate the main issues, consider the high level design features, possible benefits and implications for users and businesses, and considerations for further work. The consultation will inform a decision on whether to move into a ‘development’ phase which will span several years. The statement further notes that the earliest date for launch of a UK CBDC would be in the second half of the decade.

The House of Commons (HoC) has also published a statement by John Glen, the Economic Secretary to the Treasury, on the same topic. [9 Nov 2021] 

HMT: CP on Future Regulatory Framework Review - proposals for reform

HMT has published a consultation paper (CP) on the Future Regulatory Framework Review for financial services. The CP sets out HM Government’s response to the feedback received from the previous CP. It makes a series of proposals to deliver the intended outcomes of the review, building on the strengths of the UK’s existing framework, including:

• the changes needed to the regulators’ statutory objectives and principles to ensure the government’s priorities and objectives for the sector are fully reflected across the breadth of the regulators’ responsibilities;
• the proposals for ensuring that accountability, scrutiny and engagement arrangements with HM Treasury, Parliament, and stakeholders are appropriate given the regulators’ responsibilities; and
• the proposed approach to returning responsibility for designing and implementing the direct requirements that apply to firms in certain areas of retained EU law to the regulators within a system established by government and Parliament.

Feedback is requested by 9 February 2022. [9 Nov 2021]

EBA examination programme for prudential supervisors for 2022

The European Banking Authority (EBA) has published the European Supervisory Examination Programme (ESEP) for 2022, which identifies key topics for supervisory attention across the EU. The ESEP is aimed at informing prudential supervisors’ planning processes and shaping their supervisory practices.

Five key topics have been identified for 2022:

• the impact of the Covid-19 on asset quality and adequate provisioning;
• information and communication technology (ICT) security risk and ICT outsourcing risk, risk data aggregation;
• digital transformation and FinTech players;
• environmental, social and governance (ESG) risk; and
• anti-money laundering and countering the financing of terrorism (AML/CFT). [12 Nov 2021]

#Outsourcing

#Risk

ESMA: Draft RTS/ITS under ECSPR

The European Securities and Markets Authority (ESMA) has published a final report containing draft regulatory and implementing technical standards (RTS and ITS) under the European Crowdfunding Service Providers Regulation (ECSPR) which entered into force on 10 November 2021. The report covers all of ESMA’s 12 mandates in this area, covering all investor protection aspects under the ECSPR. [11 Nov 2021]  

EBA: DP on machine learning for IRB models

EBA has published a discussion paper (DP) on machine learning for internal ratings-based (IRB) models. The DP seeks to understand the challenges and opportunities of machine learning should it be applied in the context of IRB models to calculate regulatory capital for credit risk.

Feedback is requested by 11 February 2022. [11 Nov 2021] 

EBA: Draft RTS on individual portfolio management loans under ECSPR

The European Banking Authority (EBA) has published draft RTS on the individual portfolio management of loans offered by crowdfunding service providers under the ECSPR. The draft RTS specify the information that crowdfunding service providers offering individual portfolio management of loans must provide to investors. The draft RTS also specify the policies, procedures and organisational arrangements that crowdfunding service providers must have in place in relation to any contingency fund they may offer to investors. [9 Nov 2021] 

Insurance Authority issues circular on FATF updates and revised IAIS application paper on combating money laundering and terrorist financing

The Insurance Authority has published a circular regarding recent updates from the Financial Action Task Force (FATF). In relation to FinTech, this includes the outcomes of the FATF plenary held during 19 to 21 October 2021 on updated guidance for a risk-based approach to virtual assets and virtual asset service providers. [12 Nov 2021]

#VASPs

Singapore FinTech Festival awards announcements

The sixth edition of the Singapore FinTech Festival took place over the week from 8 to 12 November.  During the festival, the Monetary Authority of Singapore (MAS) made a number of award announcements:

• MAS and the Singapore FinTech Association (SFA) announced the award winners of the Global FinTech Hackcelerator, the SFF Global FinTech Awards and the Most Innovative FinTech e-Gifting Award. The winners, comprising financial institutions, FinTechs and solution providers, were recognised for their ground-breaking solutions that promote financial inclusion and sustainable development in the financial industry.
• MAS announced the results of the Global CBDC Challenge.
• MAS announced the three winners of the inaugural Global Veritas Challenge 2021. The winners successfully addressed key challenges in validating the fairness of artificial intelligence (AI) solutions for specific banking use cases. [7 to 12 Nov 2021] 

#CBDCs

MAS: Digital trade financing pilot between MLETR-harmonised jurisdictions

MAS has announced the conclusion of a cross-border digital trade financing pilot between jurisdictions that have adopted the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Transferable Records (MLETR). The pilot was a collaboration between regulatory authorities in Singapore and Abu Dhabi and commercial firms.  [11 Nov 2021]

MAS speech: Money, finance and the internet

MAS has published the speech delivered by its Managing Director, Mr Ravi Menon, at the Singapore FinTech Festival. Mr Menon spoke about how the future of Money, Finance, and the Internet are entwined, and their potential far-reaching effects on economies and societies.  [9 Nov 2021]

MAS makes enhancements to FinTech Regulatory Sandbox

MAS has announced three enhancements to its FinTech Regulatory Sandbox which will take effect on 1 January 2022. The enhancement are: expansion of the eligibility criteria to include early adopters of technology; streamlined application with financial grant; and participation in Deal Fridays.  [9 Nov 2021] 

MAS announces sustainability data pilot

MAS has announced that it will partner with industry to pilot four digital platforms that will focus on improving the financial sector's access to high quality, consistent and granular sustainability data. The pilot is taking place under the auspices of Project Greenprint, which MAS launched in December 2020 to harness innovation and technology to promote a green finance ecosystem through helping to mobilise capital, monitor sustainability commitments, and measure impact. The four digital platforms are expected to be completed in the second half of 2022.  [9 Nov 2021]

#Innovation

#Digital 

MAS announces second phase of SGFinDex

MAS and the Smart Nation and Digital Government Group (SNDGG) have launched the second phase of the Singapore Financial Data Exchange (SGFinDex).

Individuals can now view information on their investment holdings at The Central Depository (CDP) as part of their consolidated financial position via participating banks’ financial planning applications and ‘MyMoneySense’, a free government financial planning digital service.  [8 Nov 2021]

MAS announces national AI capabilities programme

MAS has announced the launch of the National AI Programme in Finance.  The Programme is a joint initiative by MAS and the National AI Office (NAIO) at the Smart Nation and Digital Government Office (SNDGO). It aims to build deep AI capabilities within Singapore’s financial sector to strengthen customer service, risk management, and business competitiveness.

The Programme is part of Singapore’s broader National AI Strategy and seeks to enhance the ability of financial institutions to research, develop and deploy AI solutions. Its objectives are to:

• increase productivity through the adoption of AI;
• create new jobs through increased AI innovation activities and upskilling in AI-related competencies; and
• improve societal acceptance of AI through sound AI governance. [8 Nov 2021]

BNM: MyFintech Week, 24-28 January 2022

The BNM has announced that its flagship fintech event – MyFintech Week 2022 will take place virtually from 24 to 28 January 2022.  [8 Nov 2021]

RBI launches its First Global Hackathon

The Reserve Bank of India (RBI) has announced that it is organising its first Global Hackathon.

The Hackathon invites participants to identify and develop solutions that have the potential to make digital payments accessible to the under-served, enhance the ease of payments and user experience, while strengthening the security of digital payments and promoting customer protection.

Registration for the hackathon starts from 15 November 2021. [9 Nov 2021]

#DigitalPayments

BSP and MAS to pursue cross-border payment linkages

The Bangko Sentral ng Pilipinas (BSP) and the MAS have signed a FinTech Cooperation Agreement to facilitate inter-operable payments between Singapore and the Philippines.

The agreement will facilitate the linkage of both countries’ real-time and QR payment systems, to provide instant cross-border payments. [10 Nov 2021]

#QR