FinTech Global Regulatory Round-up – w/e 28 January 2022

BIS: Paper on virtual banking

The Bank for International Settlements (BIS) has published a paper on virtual banking. The paper considers:

• financial inclusion challenges;
• technological innovation in banking;
• how information capital lessens the dependence on collateral;
• data governance; and
• the regulatory framework. [27 Jan 2022]

#Innovation

BIS: Innovation Hub 2022 work programme

The Bank for International Settlements (BIS) Innovation Hub has published its work programme for 2022. In the programme, the Innovation Hub sets out the new projects it will launch on:

• central bank digital currencies (CBDCs);
• next generation payments systems and Decentralised Finance (DeFi);
• expanding its portfolio of explorations seeking to develop new technological public goods for central banks;
• green finance;
• regulatory and supervisory technology; and
• cyber security. [25 Jan 2022]

#DeFi

#CyberSecurity

FCA: Regulation round-up – January 2022

The FCA has published the January 2022 edition of its Regulation Round-up. This issue covers the hot topics of strengthening financial promotion rules for high-risk investments, including cryptoassets; Covid-19 and borrowers in financial difficulty; regulatory references under the Senior Managers & Certification Regime (SM&CR); and changes to FCA application fees. [27 Jan 2022]

TSC: Letter from FCA following December oral evidence session

The House of Commons Treasury Select Committee (TSC) has published a letter from Nikhil Rathi, Chief Executive of the FCA, in which the FCA provides further information following its oral evidence session of 8 December 2021. In the letter, the FCA responds to a number of questions posed by the TSC on the following topics: FCA data-related spending; wait times for applications to the FCA; cryptocurrencies; environmental, social, and governance (ESG) disclosures; and the approach to prosecutions for anti-money laundering (AML) offences. [25 Jan 2022]

ESMA: New Q&As

The ESMA has published new questions and answers (Q&As) on the following topics:

• Benchmarks Regulation (BMR);
• European Crowdfunding Service Providers Regulation (ECSPR);
• MiFID II and the Markets in Financial Instruments Regulation (MiFIR) transparency topics; and
• Securities Financing Transactions Regulation (SFTR) data reporting. [28 Jan 2022]

EIOPA: CP on certain aspects relating to retail investor protection

The European Insurance and Occupational Pensions Authority (EIOPA) has published a CP on retail investor protection in relation to the sale of Insurance-Based Investment Products (IBIPs). The CP is in response to a call for advice, which the European Commission (EC) sent to EIOPA in July 2021. In the CP, EIOPA sets out proposals in five different areas:

• enhancing consumer engagement with disclosures, including digital disclosures;
• assessing the risks and opportunities presented by new digital tools & channels;
• tackling damaging conflicts of interest in the sales process;
• promotion of an affordable and efficient sales process; and
• assessing the impact of complexity in the retail investment product market.

Feedback is requested by 25 February 2022. EIOPA will hold a public hearing on 18 February 2022. [28 Jan 2022]

#RetailInvestors

ESMA: CP on multilateral systems and trading venue perimeter

ESMA has published a CP to assist it in producing an opinion relating to multilateral systems and the perimeter for trading venue authorisation. The CP sets out proposals that seek to clarify the Markets in Financial Instruments Directive II (MiFID II) provisions relating to multilateral systems and the trading venue authorisation perimeter. In particular, the CP looks at request for quote (RFQ) systems and new technology providers that may, in some circumstances, operate de facto multilateral systems which require authorisation.

Feedback is requested by 29 April 2022. ESMA will publish a final report in Q3 2022. [28 Jan 2022]

#MTFs

ESMA new Q&As on ECSPR

ESMA has published updated Q&As on the European crowdfunding service providers for business regulation (ECSPR). The latest updates relate to investor protection provisions. [28 Jan 2022]

ESRB: Recommendation on a pan-European systemic cyber incident coordination framework

The European Systemic Risk Board (ESRB) has published a recommendation, dated 2 December 2021, on the establishment of a pan-European systemic cyber incident coordination framework (EU-SCICF). The proposal to establish a EU-SCICF aims to strengthen coordination among financial and other regulatory authorities at the EU and international level.

The ESRB has also published a report on mitigating systemic cyber risk, which explains in detail how the EU-SCICF would facilitate an effective response to a major cyber incident.

The European Supervisory Authorities (ESAs) have published a statement welcoming the ESRB's recommendation. [27 Jan 2022] 

EIOPA: Consumer Trends Report 2021

The European Insurance and Occupational Pensions Authority (EIOPA) has published its Consumer Trends Report (with an accompanying summary). In the report, EIOPA highlights an acceleration in digitalisation as a clear trend emerging from Covid-19. The report notes that digitalisation brings opportunities, however, it also increases concerns for consumers, such as fraud and exclusion from access to financial products. [24 Jan 2022] 

HKMA deputy chief executive delivers presentation on Hong Kong banking sector 2021 year-end review and priorities for 2022

The HKMA's Deputy Chief Executive, Mr Arthur Yuen, has delivered a presentation on the HKMA's 2021 year-end review and priorities for 2022 for the Hong Kong banking sector.

In his 2021 review, Mr Yuen indicated that the banking sector had remained resilient, and that asset quality stayed healthy despite expected headwinds.  The HKMA focused its supervisory work on credit, operational resilience and technology risk management, anti-money laundering and counter terrorist financing (AML/CFT), and consumer protection.  Its developmental initiatives included regtech promotion, cross-boundary Wealth Management Connect and green and sustainable banking.

Looking ahead in 2022, the HKMA's priorities include:

• staying vigilant to the evolving credit landscape (including close surveillance and forward looking action to ensure effective credit risk management by banks);
• enhancing operational and cyber resilience amid growing digitalisation (including implementation of the new Supervisory Policy Manual module on operational resilience, review of authorised institutions' hybrid working arrangements and providing guidance on cloud computing);
• promoting technology adoption (including tech baseline assessment and suptech adoption);
• strengthening the AML/CFT landscape (including updating the Hong Kong money laundering and terrorist financing risk assessment, updating legislation and AML/CFT guidelines, and strengthening ability of banks' monitoring systems);
• enhancing consumer protection (including consumer protection on innovative products and new insurance product offerings, and implementation of the credit reference platform);
• promoting green and sustainable banking (including implementing supervisory requirements, exploring the development of a green taxonomy, revamping the "greenness assessment" framework targeted for launch in the second half of 2022, and exploring tools and technology for dealing with climate risks);
• capacity building (including upskilling practitioners and building a sustainable future talent pipeline);
• implementation of Basel Standards (including the Basel III final reforms and other Basel standards).  [26 Jan 2022]

#CyberResilience

#RegTech

#SupTech

HKMA publishes fifth issue of Regtech Adoption Practice Guide on cyber risk management

The HKMA has published the fifth issue of its Regtech Adoption Practice Guide, focusing on regtech solutions in the area of cyber risk management.  The guide series was launched by the HKMA in June 2021 as part of its regtech adoption roadmap to provide banks with detailed practical guidance on the adoption of regtech solutions (see our previous update for the fourth issue).

The topics covered in the fifth issue include:

• key challenges faced by Hong Kong-based banks in relation to cyber risk management, and the benefits and key considerations when adopting cyber risk management regtech solutions;
• practical implementation guidance to banks on the implementation of cyber risk management regtech solutions; and
• use cases on the adoption of cyber risk management solutions, including key learnings from successful cyber risk management implementation from the perspectives of both the bank and the regtech provider.  [25 Jan 2022]

MAS keynote to the asset management industry – green finance, digitalisation, and governance and risk management

The Monetary Authority of Singapore (MAS) has published the keynote address delivered by Mr Tan Keng Heng, Executive Director, MAS, at the Investment Management Association of Singapore’s 8th Regulatory Forum. Mr Heng discussed:

• green finance and sustainable investing, noting the potential impact of greenwashing and MAS' intention to introduce ESG-specific requirements on fund naming, prospectus disclosure, and periodic reporting disclosures;
• digitalisation, observing that financial institutions that embrace digital transformation and innovation will be better placed to capitalise on the gradual economic recovery and seize new opportunities in the post-pandemic world; and
• the continuing importance of maintaining sound fundamentals in governance and risk management, in particular technology risk management and liquidity risk management.  [28 Jan 2022]

MAS and Bank Indonesia sign MoU on central banking, financial regulation, and innovation

MAS and Bank Indonesia (BI) have announced that they have signed a Memorandum of Understanding (MoU) to strengthen bilateral cooperation and deepen ties.

The MoU reflects the joint interest in promoting collaboration on projects in relation to payments innovation and formalisse cooperation across an expanded range of central bank and regulatory functions. These include monetary policy, macroprudential policy, financial stability, oversight of the payment and settlement systems, regulatory and supervisory frameworks, and anti-money laundering and countering the financing of terrorism.  [21 Jan 2022] 

BNM and BI launch cross-border QR payment linkage

Bank Negara Malaysia (BNM) and Bank Indonesia (BI) have announced the launch of a cross-border QR payment linkage. Consumers in both countries are able to make real-time retail payments by scanning DuitNow or QRIS (Quick Response Code Indonesian Standard) QR codes displayed by offline and online merchants. This begins a pilot phase that aims for a full commercial launch in the third quarter of 2022. [27 Jan 2022]

BNM: Governor's address and Financial Sector Blueprint 2022-2026

BNM has published the speech delivered by the Governor at the start of MyFintech Week 2022. The speech focused on the release of Malaysia's Financial Sector Blueprint 2022-2026.

The Blueprint outlines the vision and strategies for the development of the financial sector. Underpinned by three broad outcomes of finance for all, finance for transformation and finance for sustainability, the Blueprint identifies five strategic thrusts to achieve these outcomes:

• fund Malaysia’s economic transformation;
• elevate the financial well-being of households and businesses;
• advance digitalisation of the financial sector;
• position the financial system to facilitate an orderly transition to greener economy; and
• advance value-based finance through Islamic finance leadership. [24 Jan 2022]

BOT, SECT, and MOF to jointly set guidelines on use of digital assets

The Bank of Thailand (BOT), the Securities and Exchange Commission of Thailand (SECT), and the Ministry of Finance (MOF) have announced that they will jointly set guidelines on the use of digital assets as a means of payment for goods and service in order to limit widespread adoption.

The agencies have deemed it necessary to regulate the use of digital assets as a means of payment to avert any potential impacts on financial stability and the economic system. The agencies also note that digital assets could also pose further risks to consumers and businesses through price volatility, cyber theft, personal data leakage, or money laundering.

SECT has published the consultation papers regarding the guidelines. Feedback is requested by 8 February 2022.

A questions and answers (Q&A) document accompanies the announcement.  [25 Jan 2022]

BOT, TBA and GFA announce launch of dStatement service

BOT, the Thai Bankers' Association (TBA), and the Government Financial Institutions Association (GFA) have announced the launch of the dStatement (digital bank statement) service. The new dStatement service is a financial information exchange service for sending and receiving bank statement data directly between banks in a machine-readable digital format. It allows financial service customers, who need to submit their bank statement as supporting documents, to request and send their bank statement data directly from one bank to another using their own mobile banking apps or via other servicing channels.  [24 Jan 2022]