FinTech Global FS Regulatory Round-up – w/e 28 July 2023

Global

BIS Working Paper: Trust bridges and money flows

The Bank for International Settlements (BIS) has published a Working Paper on the use of digital marketplaces to improve cross-border payments. The paper discusses the inherent problems with cross-border payments (that they are expensive, slow, and opaque) resulting from limited trust among counterparties and considers that, given the fixed costs to build trust links, which involve exclusive bilateral credit relationships among correspondent banks, the tokenisation of money can allow for a potentially more efficient market structure to exchange money. The paper concludes that a global marketplace would facilitate the trade of tokenised money directly across borders. [25 Jul 2023]

#tokenisation

UK

UK and Singapore enhance cooperation in Sustainable Finance and FinTech

HM Treasury (HMT) has published a summary of the eighth meeting of the UK-Singapore Financial Dialogue. With a focus on sustainable finance in particular, both countries agreed on the urgent need to develop approaches that facilitate and scale financing to support the transition of economies to net zero.

Discussion on fintech included crypto and digital assets, on which the two countries agreed to contribute to efforts to develop global regulatory standards within international standard setting bodies such as the International Organisation of Securities Commissions (IOSCO), FSB and others. The FSB recommendations on crypto-assets, including stablecoins, were also welcomed. [27 Jul 2023]

#fintech #stablecoins #digitalassets

Europe

EIOPA consults on open insurance use case – insurance dashboard

The European Insurance and Occupational Pensions Authority (EIOPA) has published a consultation on an open insurance use case. The paper examines the key features of an insurance dashboard which would collect and show a consumer, in a user-friendly way, all their insurance policies and related information in one place.

The paper is a follow up to an initial discussion paper on open insurance, after which EIOPA concluded that further work on more concrete, specific and detailed open insurance use cases might facilitate a better understanding of implications for consumers, industry and supervisors.

In terms of next steps, EIOPA will not build the insurance dashboard set out in the paper, now or in the future, and is not expecting this example to be developed by the market as such; EIOPA is not identifying it as a good or bad example of open insurance. The use case is instead intended as a theorical but concrete example so the supervisory community and market participants can get a better view on open insurance and related issues.

Responses to the consultation are requested by 24 October 2023. [24 Jul 2023]

#OpenInsurance

Hong Kong

HKMA and SAMA strengthen financial collaboration via bilateral meeting and signing of MOU

The HKMA and the Saudi Central Bank (SAMA) held a bilateral meeting on 26 July 2023 to strengthen collaboration between the financial services sectors in the two jurisdictions. The discussion was underpinned by four major topics, being financial infrastructure development, open market operations, market connectivity and sustainable development. The HKMA and the SAMA also shared their experiences in research and innovation, highlighting the latest developments in areas such as supervision technologies (suptech), tokenisation and payment infrastructure.

The two authorities signed a memorandum of understanding (MOU) to promote joint deliberations in financial innovation. Through the MOU, the HKMA and the SAMA aim to promote knowledge sharing in financial innovation and fintech, focusing on emerging trends, best practices, regulatory issues, policies and legislation.  Further, the MOU will facilitate collaboration across the fintech landscapes in the respective jurisdictions. [27 Jul 2023]

#suptech #tokenisation #fintech 

HKEX announces market rehearsal sessions and second round of market practice sessions for FINI 

The Hong Kong Securities Clearing Company Limited (HKSCC) has issued a circular to inform the market that the HKEX has organised market rehearsal sessions and a second round of market practice sessions for the Fast Interface for New Issuance (FINI). The exact launch date of FINI will be announced following the completion of the market rehearsal sessions.

Market rehearsal sessions on 26 August 2023 and 2 September 2023

• The sessions will enable FINI users to verify and test their account setup in the FINI production environment, and to execute a hypothetical IPO in a compressed, one-day simulation of the T+2 settlement timetable.
• The sessions will be open to FINI banks and HKSCC participants, while other FINI users will be assigned to a specific test case by way of advance agreement with HKEX.
• To participate, FINI users must complete their user account and teams setup within the HKEX Access Management Portal.   A Market Rehearsal Information Pack containing details of the testing timetable is available on the FINI webpage, and a market rehearsal playbook will be provided to FINI users with assigned roles ahead of their respective sessions.

Market practice sessions from 7 to 23 August 2023

• Following strong interest from FINI users to conduct additional workflow testing and familiarisation with different roles and functions in a simulated "real speed" IPO, the HKEX will arrange a second round of market practice sessions from 7 to 23 August 2023.  These sessions will be open to all FINI banks and HKSCC participants.
• FINI users who participated in the first round of market practice sessions do not need to participate in the second round unless they wish to do so. A Market Practice Session Information Pack is available on the FINI webpage.  [25 Jul 2023]

#FINI

Singapore

MAS: UK and Singapore enhance in sustainable finance and fintech

The Monetary Authority of Singapore (MAS) has published a summary of the eighth meeting of the UK-Singapore Financial Dialogue. With a focus on sustainable finance in particular, both countries agreed on the urgent need to develop approaches that facilitate and scale financing to support the transition of economies to net zero.

Particular areas of consideration were:

• transition finance – it was agreed that globally comparable and transparent transition plans that include credible forward-looking information can help reduce fragmentation, scale transition finance, and support sustainability in finance more generally;
• international standards – it was re-affirmed that both countries would continue support for a global framework of sustainability disclosures based on the ISSB final standards for general reporting on sustainability and for climate-related disclosures; and
• nature and biodiversity – the need to deepen the understanding of nature and biodiversity loss and its impact on the financial sector was re-affirmed.

Discussion on fintech included crypto and digital assets, on which the two countries agreed to contribute to efforts to develop global regulatory standards within international standard setting bodies such as the International Organisation of Securities Commissions (IOSCO), the Financial Stability Board (FSB) and others. The FSB recommendations on cryptoassets including stablecoins were also welcomed.  [27 Jul 2023]

#fintech #crypto #stablecoins #digitalassets

MAS announces end-2025 timeline to eliminate corporate cheques

MAS has announced that all corporate cheques will be eliminated by end-2025 while individuals will still be able to use cheques for a period after 2025. Additionally, banks will start charging for Singapore Dollar (SGD)-denominated cheques by 1 November 2023 to recover rising cheque processing costs.

MAS confirmed that it is working closely with the Association of Banks in Singapore (ABS), the financial industry and government agencies on a series of initiatives aimed at transiting cheque users to e-payment solutions. This will include a specific e-payment solution that can serve as an alternative for post-dated cheques, seeking to provide greater convenience to corporates and individuals.

#e-payment

India

SEBI: Extension of consultation period on CSCRF

The Securities and Exchange Board of India (SEBI) has announced that it has extended the timeline for submission of comments on its consultation paper on the consolidated cybersecurity and cyber resilience framework  (CSCRF) to 8 August 2023.  [21 Jul 2023]

#cybersecurity #cyberresilience

US

SEC proposes reforms relating to investment advisers operating exclusively through the internet

The Securities and Exchange Commission (SEC) has proposed amendments to the rule permitting certain investment advisers that provide investment advisory services through the internet to register with the Commission. The proposed amendments generally would require an investment adviser relying on the internet adviser registration rule to have at all times an operational interactive website through which the adviser provides digital investment advisory services on an ongoing basis to more than one client. The proposed amendments would also eliminate the de minimis exception from the current rule by proposing to require that an internet investment adviser provide advice to all of its clients exclusively through an operational interactive website, and make certain corresponding changes to Form ADV.

The proposing release will be published in the Federal Register. The public comment period will remain open until 60 days after the date of publication of the proposing release in the Federal Register. [26 Jul 2023]

#InternetIAdviser

SEC proposes new requirements to address risks to investors from conflicts of interest associated with the use of predictive data analytics by broker-dealers and investment advisers

The SEC has proposed new rules that would require broker-dealers and investment advisers to take certain steps to address conflicts of interest associated with their use of predictive data analytics and similar technologies to interact with investors to prevent firms from placing their interests ahead of investors’ interests.

The SEC explains that use by broker-dealers and investment advisers of technologies to optimize for, predict, guide, forecast, or direct investment-related behaviors or outcomes has accelerated. Use of such technologies can be beneficial to investors in providing greater market access, efficiency, and returns. To the extent that firms are using certain technologies in a manner that places their own interests ahead of investors’ interests, however, investors can suffer financial harm. Given the scalability of these technologies and the potential for firms to reach a broad audience at a rapid speed, any resulting conflicts of interest could cause harm to investors in a more pronounced fashion and on a broader scale than previously possible.

The proposing release will be published in the Federal Register. The public comment period will remain open until 60 days after the date of publication of the proposing release in the Federal Register.  [26 Jul 2023]

#PredictiveAnalytics #AI

SEC adopts rules on cybersecurity risk management, strategy, governance, and incident disclosure by public companies

The SEC has adopted rules requiring registrants to disclose material cybersecurity incidents they experience and to disclose on an annual basis material information regarding their cybersecurity risk management, strategy, and governance. The Commission also adopted rules requiring foreign private issuers to make comparable disclosures.

The new rules will require registrants to disclose on the new Item 1.05 of Form 8-K any cybersecurity incident they determine to be material and to describe the material aspects of the incident's nature, scope, and timing, as well as its material impact or reasonably likely material impact on the registrant. An Item 1.05 Form 8-K will generally be due four business days after a registrant determines that a cybersecurity incident is material. The disclosure may be delayed if the US Attorney General determines that immediate disclosure would pose a substantial risk to national security or public safety and notifies the Commission of such determination in writing.

The final rules will become effective 30 days following publication of the adopting release in the Federal Register.  [26 Jul 2023]

#CyberSecurity

CFTC charges Tennessee husband and wife realtors for operating a $6 million digital assets commodity pool scheme

The CFTC has announced that it has filed a complaint in the US District Court for the Middle District of Tennessee against two individuals of Clarksville, Tennessee. The complaint charges the defendants with defrauding over 100 people across the US and failing to register with the CFTC in connection with a multi-million dollar commodity pool scheme they operated from approximately July 2022 through January 2023. In its continuing litigation, the CFTC seeks restitution to defrauded pool participants, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged. [26 Jul 2023]

#DigitalAssets #Crypto