Worldwide: FinTech Global FS Regulatory Round-up – w/e 24 March 2023

BCBS continues to focus on banks' exposures to cryptoassets – workplan sets out targeted reviews

The Basel Committee on Banking Supervision (BCBS) met on 14 March and 22-23 March to discuss recent market developments, risks to the global banking system and related vulnerabilities, and a range of policy matters. With regard to cryptoassets, and following on from the publication of a prudential treatment for banks' exposures to cryptoassets towards the end of 2022, the BCBS agreed a workplan around monitoring the risks to the global banking system posed by cryptoassets. This workplan includes: targeted reviews of the prudential treatment, including as regards the treatment of 'permissionless' blockchains and the eligibility criteria for 'Group 1' stablecoins.

BIS Innovation Hub: Report on enabling instant cross-border payments – Project Nexus

The Bank for International Settlements (BIS) Innovation Hub has issued a report as Project Nexus successfully linking Eurosystem, Malaysia and Singapore payment systems. The BIS Innovation Hub Singapore Centre developed the Nexus concept of a first-of-its-kind multilateral network connecting multiple domestic instant payment systems (IPS). The Nexus prototype successfully connected the three test IPS, allowing payments to be sent across the three using only mobile phone numbers. In the next phase, the BIS Innovation Hub and the central banks of Indonesia, Malaysia, the Philippines, Singapore and Thailand will jointly work towards connecting their domestic IPS through Nexus.

It is envisaged that Nexus could eventually be implemented globally. To achieve this, a Global Advisory Panel of central banks and payment system operators will be established to advise on the project's development beyond the Southeast Asian region. The Bank of Italy and the European Central Bank (ECB) will be invited to join this panel. [23 Mar 2023]

TSC: BoE and HMT letters on SVB UK

The Treasury Committee (TSC) has published responses received from the Bank of England (BoE) and HM Treasury (HMT) to the TSC's questions on the collapse and subsequent purchase by HSBC UK of Silicon Valley Bank UK (SVB UK). The Governor of the BoE, the Chief Executive of the PRA and the BoE's Deputy Governor for Markets and Banking will give evidence to the TSC on the collapse of SVB UK and wider stresses in the banking sector on Tuesday 28 March. [23 Mar 2023]

FCA speech on the changing regulatory approaches to advice and guidance

The FCA has published a speech by Therese Chambers, Director of Consumer Investments, on the plans for a new simplified advice regime for mainstream investment via a stocks and shares ISA wrapper and the joint FCA and HMT review of the advice/guidance boundary. Ms Chambers advised that because of the substantial nature of the work involved, the advice/guidance boundary review was expected to take some time to complete. Given the timescales involved, Ms Chambers signposted the FCA's innovation support, including the regulatory and digital sandboxes which facilitate testing of innovative products and services in a controlled environment. [21 Mar 2023]

FCA: RPC opinion on prohibiting the sale to retail clients of investment products that reference cryptoassets

The FCA has published an opinion from the Regulatory Policy Committee (RPC) in relation to the FCA's business impact target assessment on prohibiting the sale to retail clients of investment products that reference cryptoassets.

The RPC is an advisory non-governmental public body sponsored by the Department for Business and Trade (DBT). It provides independent scrutiny, assessing the quality of evidence and analysis which have informed regulatory proposals.

The RPC considers that the assessment made by the FCA did not include sufficient evidence or discussion of the analysis of the impacts to enable the equivalent annual net direct cost to business to be validated, not did it provide a clear explanation of what would happen to the market in the absence of the intervention. The RPC makes a number of other constructive comments about approaches that might further have strengthened the assessment. [20 Mar 2023]

SEHK announces new specialist technology company listing rules, to be implemented on 31 March 2023

The Stock Exchange of Hong Kong Limited (SEHK) has announced that it has released consultation conclusions on the expansion of Hong Kong's listing framework for specialist technology companies, which are broadly companies primarily engaged in the research and development of, and the commercialisation and/or sales of, products or services that apply science and/or technology within an acceptable sector of a listed specialist technology industry. The consultation on such reform was launched in October 2022 (see our previous update).

A new chapter will be added to the Main Board Listing Rules on 31 March 2023, at which time companies seeking to list under the new chapter may submit a formal application.

The SEHK received majority support for most of its proposals, but has made some adjustments to the new Listing Rules to reflect market feedback. A summary of the key differences between the consultation proposals and the final requirements is set out in the SEHK's press release. They involve requirements relating to market capitalisation, research and development expenditure ratio, meaningful investment from sophisticated independent investors, and optimised price discovery process. An overview is also provided in a media briefing presentation deck. [24 Mar 2023]

#Listing

HKMA chief executive Eddie Yue delivers opening keynote at the ASIFMA 'Scaling up Sustainable Finance in Asia' conference

The HKMA's Chief Executive, Mr Eddie Yue, delivered the opening keynote at the Asian Securities Industry & Financial Markets Association's 'Scaling up Sustainable Finance in Asia' conference.

Mr Yue noted that the HKMA is working with Government agencies, fellow regulators and other stakeholders from the financial sector, academia and business community to foster three critical elements which underpin a competitive climate finance ecosystem – standards, data, and talent.

• Standards – Hong Kong is the first Asian jurisdiction to mandate climate-related disclosure across the financial sector by 2025, in line with the global framework set by the Task Force on Climate-related Financial Disclosures. It also made an early commitment to adopt new standards promulgated by the International Sustainability Standards Board. It is currently exploring the development of a green classification framework on the basis of the Common Ground Taxonomy jointly developed by China and the EU.
• Data – The HKMA is working with other regulators and the private sector to improve data accessibility and develop a data repository and analytics capability for the industry. One recent example is the collaboration with the Carbon Disclosure Project, a leading international environmental disclosure platform, to launch a climate risk assessment project that assists corporates (especially SMEs) in reporting company-level, climate-related data to help financial institutions assess risk and make credit decisions.
• Talent – The HKMA is tackling this element via training, incentives (subsidies) and the development of a regulator-approved knowledge framework (ie, the Enhanced Competency Framework).

In the coming five years, planned annual issuance of Government Green Bonds will increase from US$35 billion to US$65 billion. The HKMA will also consider how best to incorporate green and sustainability elements into a new infrastructure bond programme it is developing for the Government. It will continue with the experimentation in tokenised green bonds, leveraging blockchain technology to enhance the efficiency of bond issuance and transaction, and to explore real-time tracking and reporting of the environmental impact of projects funded by bond proceeds.

To promote financial inclusion, the HKMA is now looking into an arrangement to earmark a certain proportion of future green and infrastructure bond issuances for priority investment by MPF funds. [17 Mar 2023]

#blockchain

MAS: Reply to Parliamentary question on cryptocurrency and stablecoins consultations

MAS has published a written reply to a Parliamentary question on MAS' cryptocurrency and stablecoins consultations. The question asked 'what is the outcome of the consultation on proposals to reduce the risk of consumer harm from cryptocurrency trading and to support the development of stablecoins; and what are the salient insights from the consultation'. In its reply, MAS explains that it received substantial feedback from a wide range of respondents and is currently reviewing the feedback. It intends to publish a response to the consultation feedback by mid-2023. [20 Mar 2023]

#Stablecoins

RBI sets out plans for new data centre and enterprise, computing & cybersecurity training institute

The Reserve Bank of India (RBI) has issued a press release in which its Governor, Shri Shaktikanta Das, sets out plans for establishment of a 'Greenfield Data Centre' and 'Enterprise Computing & Cybersecurity Training Institute' in Bhubaneswar, Odisha. The Governor acknowledged the critical role played by technology in supporting the activities of the financial sector and the RBI over the years and recently, in facilitating a robust recovery from the pandemic. He highlighted the need for augmenting the existing computing infrastructure of the RBI supported by cutting edge facilities for research and capacity building in emerging areas straddling central banking, technology and cybersecurity for a future ready RBI. [22 Mar 2023]

IFSCA establishes new expert committee – onshoring Indian FinTech and startups

The International Financial Services Centres Authority (IFSCA) has announced the formation of a new expert committee which will:

• suggest measures to encourage the Indian Fintech and startups domiciled abroad to relocate to Gujarat International Finance Tec (GIFT) IFSC;
• identify issues that may be critical for development of GIFT IFSC as a global Fintech Hub;
• help to encourage new Fintechs having global outlook to setup commercial presence in GIFT IFSC; and
• make any other suggestions for development of International Innovation Hub at GIFT IFSC. [21 Mar 2023]

SECP pitches crowdfunding as a financing option to Visayas-based MSMEs

The SECP has brought the second leg of its nationwide roadshow to Cebu City, successfully pitching the capital market as an accessible source of funding to Visayas-based micro, small, and medium enterprises (MSMEs). SECP presented crowdfunding, among others, as an accessible and convenient means for such businesses to secure funds for expansion; the initiative aims to harness the potential of MSMEs for further growth. [21 Mar 2023]

SBV: Enhancing operations in the banking sector

The State Bank of Vietnam (SVB) has issued a press release following the Vietnam Business Forum (VPF) 2023. Representatives from the associations and working groups discussed issues and made recommendations in the field of banking operations. In particular, the forum discussed: enhancing the framework for green finance; managing environmental, social and governance (ESG) risks; central bank digital currency (CBDC) development; anti-money laundering (AML); and fintech and payment operations. [21 Mar 2023]

SEC charges crypto entrepreneur and his companies for fraud and other securities law violations

The Securities and Exchange Commission (SEC) has announced charges against crypto asset entrepreneur Justin Sun and three of his wholly-owned companies for the unregistered offer and sale of crypto asset securities Tronix (TRX) and BitTorrent (BTT). The SEC also charged Sun and his companies with fraudulently manipulating the secondary market for TRX through extensive wash trading, which involves the simultaneous or near-simultaneous purchase and sale of a security to make it appear actively traded without an actual change in beneficial ownership, and for orchestrating a scheme to pay celebrities to tout TRX and BTT without disclosing their compensation. The SEC simultaneously charged eight celebrities for illegally touting TRX and/or BTT without disclosing that they were compensated for doing so and the amount of their compensation. Litigation against Sun is pending; and the celebrities charged have agreed to pay a total of more than $400,000 in disgorgement, interest, and penalties to settle the charges, without admitting or denying the SEC's findings. [22 Mar 2023]