In this regular update, we round-up FinTech-related financial services regulatory developments for the week ending 9 September 2022.

ICYMI

Recent updates from Herbert Smith Freehills include:

Global

BCBS: Speech on digitalisation and banking

The Basel Committee on Banking Supervision (BCBS) has published a speech by Pablo Hernández de Cos, Chair of the BCBS and Governor of the Bank of Spain, on digitalisation and banking. In his speech, Mr Hernández de Cos spoke about: the digitalisation of finance and the BCBS's work in this area; trust and banking, noting the need for regulators to review the scope of the regulatory perimeter and the type of regulations that apply; and the opportunities and risks of artificial intelligence (AI), models and judgment. [9 Sep 2022]

#Digitalisation

#Banking

CPMI: Paper on liquidity bridges across central banks for cross-border payments

The Committee on Payments and Market Infrastructures (CPMI) of the Bank for International Settlements (BIS) has published a paper on liquidity bridges across central banks for cross-border payments. This paper seeks to help central banks make informed decisions on whether to establish liquidity bridges by laying out the benefits, risks, and challenges in the design and operation of liquidity bridges. It sets out a practical framework for central banks when considering the potential design and feature choices of central bank liquidity bridges. [7 Sep 2022]

#Payments

#CrossBorder

UK

HoC: Research briefing on regulatory approach to cryptoassets and currencies

The House of Commons (HoC) has published a research briefing on HMG's regulatory approach to cryptoassets and currencies. HMG notes that it intends to bring stablecoins into the regulatory perimeter through the Financial Services and Markets Bill, with the second reading scheduled for 7 September. The briefing covers the definition and regulation of cryptoassets in the UK, and provides various materials on cryptoassets including: articles; press notices; and parliamentary material. [6 Sep 2022]

#Cryptoassets

CMA: DRCF Terms of Reference

The Competition and Markets Authority (CMA) has published the Terms of Reference (ToR) for the Digital Regulation Cooperation Forum (DRCF), which comprises the CMA, FCA, Ofcom and the Information Commissioner's Office. The ToR set out the DRCF's purpose, goals and objectives; its status and accountability; membership details; the different roles and responsibilities; appointment information; details on decision making, its annual workplan and budget; amendments to the ToR; and closure of the DRCF. [5 Sep 2022]

#DRCF

EU

EC: Speech on Banking Union, CMU and digital finance progress

The European Commission (EC) has published a speech by Mairead McGuinness, European Commissioner for Financial Stability, Financial Services and the Capital Markets Union, in which she provides an update on the progress of the work on the Banking Union, Capital Markets Union (CMU) and digital finance. In Ms McGuinness's speech, she highlights the following points.

  • The EC is working on legislative proposals to reform the Banking Union framework.
  • The agenda for the CMU includes streamlining the rules for listing on public markets and harmonising the rules on insolvency proceedings. The EC also plans to present new initiatives next year to help retail investors participate in capital markets.
  • The EC will propose measures before the end of this year to make the EU clearing landscape stronger and to decrease the over-reliance on UK central counterparties (CCPs).
  • The EC will embrace digital finance and the new possibilities it offers. This includes proposals to regulate crypto-assets and strengthen the digital operational resilience of financial companies.
  • The EC is working with the European Central Bank (ECB) on the possibility of a digital euro, and will propose legislation next year. [9 Sep 2022]
#DigitalFinance

#OpRes

#Cryptoassets

Australia

APRA Chair delivers speech to RMA Australia on the theme of 'disruption'

The chair of the Australian Prudential Regulation Authority (APRA), Wayne Byrnes, delivered a speech to the Risk Management Association of Australia (RMA) on 7 September outlining his perspective on the conference's theme of 'disruption'. Byrnes' speech focused on:

  • operational risk and resilience;
  • governance, culture, remuneration and accountability; and
  • climate change.

Specifically, Byrnes noted Prudential Standard CPS 230 Operational Resilience and its role in ensuring that financial institutions have robust frameworks in place to protect and preserve the reliability of their critical operations. Byrnes also commented on CPS 511 Remuneration which is set to come into force from the beginning of 2023 and aims to produce a better overall measure of executive performance by requiring a material weight be given to non-financial risk metrics. This, he believes, has forced investment in a meaningful understanding of non-financial risk which has seen improvement in remuneration practices. Finally, on the topic of climate change, Byrnes reflected on novel climate risks that are continuing to challenge business risk management, and noted the importance of translating non-financial climate risk into financial impact. [7 Sep 2022]

#OpRes

Hong Kong

SFC Deputy CEO delivers speech on market resilience, virtual assets and sustainable finance

Ms Julia Leung (SFC's Deputy Chief Executive Officer and Executive Director, Intermediaries) recently delivered a keynote speech at the AIMA APAC Annual Forum 2022, discussing developments relating to market resilience, virtual assets and sustainable finance. In relation to virtual assets, Ms Leung said that the SFC adopts a "same business, same risk, same rules" approach. The anti-money laundering amendment bill recently introduced to the Legislative Council would make licensing by the SFC mandatory for any entity operating a centralised virtual asset exchange in Hong Kong or targeting Hong Kong investors. In addition to anti-money laundering, other areas (market integrity, cybersecurity, safe custody of assets, and operators' conflicts of interests) will be regulated in a similar manner as entities providing brokerage and automated trading services. [6 Sep 2022]

#VirtualAssets

India

RBI issues digital lending guidelines

The RBI has issued a circular, Guidelines on Digital Lending, which sets out instructions applicable for 'existing customers availing fresh loans' and 'new customers getting onboarded' from the date of the circular. Regulated entities (REs) have been given time till November 30, 2022, to put in place adequate systems and processes to ensure that 'existing digital loans' (sanctioned as on the date of the circular) are also in compliance with the guidelines. [2 Sep 2022]

#DigitalLending

SEBI circular on performance claims made by unregulated platforms

The Securities and Exchange Board of India (SEBI) has issued a circular on performance and return claims made by unregulated platforms offering algorithmic trading strategies. [2 Sep 2022]

#AlgoTrading

Ukraine-related sanctions information

Regular updates on sanctions and other developments that may impact businesses with interests or operations in Ukraine and/or Russia are available on our FSR and Corporate Crime Notes blog here.

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