In this regular update, we round-up FinTech-related financial services regulatory developments for the week ending 29 April 2022.
|BCBS Chair addresses City Week on Basel III, cryptoassets, and climate-related financial risk
Chair of the Basel Committee on Banking Supervision (BCBS) and Governor of the Bank of Spain Pablo Hernández de Cos addressed City Week on Basel III, cryptoassets and climate-related financial risks. Key takeaways from his remarks include:
|BIS: G20 TechSprint 2022
The Bank for International Settlements (BIS) Innovation Hub and Bank Indonesia have launched the third G20 TechSprint Initiative as one of the side events of Indonesia’s G20 Presidency, focusing on developing new solutions for central bank digital currencies (CBDCs). The G20 TechSprint invites development of solutions for issuing, distributing and transferring CBDCs; deepening financial inclusion; and finding ways to link up domestic payment systems. Shortlisted teams will be invited to showcase their prototypes in July 2022; and the winners will be announced in October 2022. [26 Apr 2022]
|BoE consults on RTGS – CHAPS Tariff and RTGS service beyond 2024
The Bank of England has published the following two CPs.
Feedback to both CPs is requested by 30 June 2022. [29 Apr 2022]
|PRA: Speech on next steps for operational resilience
The PRA has published a speech by David Bailey, Executive Director, UK Deposit Takers Supervision, on operational resilience and next steps on the PRA’s supervisory roadmap. In his speech, Mr Bailey spoke about:
|LSB: CRM Code for APP Scams
The Lending Standards Board (LSB) has announced that a series of updates have been made to the Contingent Reimbursement Model Code (the CRM Code) to further strengthen protections against authorised push payment (APP) scams. The updates to the Code are intended to: help improve customers’ understanding of how firms are assessing APP scam cases; help prevent scams; and make the Code accessible and relevant to a wider range of firms. [28 Apr 2022]
|DRCF: Annual Report 2021-22, workplan 2022-23, and research papers
The Digital Regulation Cooperation Forum (DRCF), which brings together the major UK regulators tasked with regulating digital services – the CMA, FCA, Information Commissioners Office (ICO) and the Office of Communications (OFCOM), has published its Annual Report for 2021-22. The DRCF has also published its workplan and key priorities for 2022 to 2023, and the following research papers:
|PDP: Progress Update Report – April 2022
The Pensions Dashboard Programme (PDP) has published its progress update report for April 2022. The PDP is responsible for designing and creating the pensions dashboards ecosystem, which contains the digital architecture that will make pensions dashboards work. It is also responsible for developing the governance framework to enable the implementation and operation of pensions dashboards. The report outlines PDP’s activities over the past six months and its areas of focus for the next six months. [27 Apr 2022]
|FCA speech at City Week: Critical issues in financial regulation
The FCA has published the speech delivered by CEO Nikhil Rathi during City Week 2022. Mr Rathi used the speech to catalogue the issues which are uppermost on the regulator’s agenda, ranging from the cost of living crisis through diversity and inclusion to the FCA’s own accountability and performance. Among the notable takeaways are:
Mr Rathi was among a number of speakers at City Week 2022, the annual event organised by City & Financial Global, with the City of London Corporation, Department for International Trade (DIT), TheCityUK and UK Finance. [26 Apr 2022]
|FCA introduces Early and High Growth Oversight for newly authorised firms
The FCA has confirmed that, following the conclusion of a successful pilot, it will expand its Early and High Growth Oversight approach to provide ‘closer support’ for newly authorised businesses by the end of 2023. Early and High Growth Oversight provides enhanced supervision for firms as they get used to their regulatory status and supports them to understand their obligations so they can meet expected standards as they grow. Firms which are to be include in the new approach will be notified by the FCA directly; over 2022 and 2023, the regulator expects that Early and High Growth Oversight will take in around 300 newly authorised firms. [26 Apr 2022]
|ESMA: Final report on certain aspects of retail investor protection
The European Securities and Markets Authority (ESMA) has published a final report containing its recommendations to the European Commission (EC) on certain aspects of retail investor protection. ESMA’s recommendations include:
ESMA also expresses its support for the EC’s proposals to prohibit receipt of payment for order flow (PFOF).
The European Insurance and Occupational Pensions Authority (EIOPA) has also published a final report setting out its advice to the EC on retail investor protection in relation to the sale of insurance-based investment products (IBIPs). [29 Apr 2022]
|ECB: CfEI on digital euro front-end prototyping
The European Central Bank (ECB) has published a call for expression of interest (CfEI) on digital euro front-end prototyping. The CfEI invites payment service providers, banks and other relevant companies to join an exercise to develop prototype user interfaces. Selected front-end providers will form a pool of providers with which the ECB can collaborate on the development of prototypes that address specific use cases for the payment process. The prototyping exercise will begin with an information session in June to discuss specific expectations for the project, including use cases.
Expressions are requested by 20 May 2022. [28 Apr 2022]
|HKMA publishes sixth issue of Regtech Adoption Practice Guide on AI-based regtech solutions
The HKMA has published the sixth issue of its Regtech Adoption Practice Guide, focusing on regtech solutions utilising artificial intelligence (AI). 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 fifth issue).
The topics covered in the sixth issue include:
|HKMA issues discussion paper on policy and design issues for introducing rCBDC (e-HKD) in Hong Kong and invites feedback
The HKMA has issued a discussion paper to invite views from the public and the industry on key policy and design issues for introducing retail central bank digital currency (rCBDC), ie, e-HKD, in Hong Kong. Members of the public and the industry are invited to submit their feedback by 27 May 2022.
Following the announcement of its “Fintech 2025” strategy in June 2021 (see our previous update), the HKMA commenced a project to study the prospect of introducing e-HKD in Hong Kong. The first part of the study focused on technical aspects, and a whitepaper setting out the HKMA’s initial findings was published in October 2021 (see our previous update). The second part of the study focused on the policy and design aspects, which is the subject of the present discussion paper.
The issues that are examined in the discussion paper include:
To facilitate stakeholders in providing their feedback, the HKMA has highlighted the issues for comment in the form of 12 discussion questions (see section 7 of the discussion paper).
Mr Eddie Yue, the Chief Executive of the HKMA, has published an inSight article which sets out four key issues concerning the future direction of e-HKD. [27 Apr 2022]
|HKMA launches Regtech Knowledge Hub
The HKMA has launched the Regtech Knowledge Hub to encourage greater sharing of regtech adoption experience and expertise within the regtech ecosystem in Hong Kong. This forms part of the HKMA’s two-year regtech promotion roadmap announced in November 2020 (see our previous update).
The hub provides an online platform for the regtech community to share success stories and experience, including industry use cases. The hub also acts as a central repository for the HKMA’s regtech-related information, including past circulars, guidance papers, and research reports.
The launch of the hub is accompanied by three innovative regtech use cases featuring:
|HKMA executive director delivers keynote speech on next generation approaches to AML and HKMA’s AML work
Ms Carmen Chu, the HKMA’s Executive Director (Enforcement and AML) delivered a keynote speech at the Association of Certified Anti-Money Laundering Specialists’ 13th Annual AML and Anti-Financial Crime Conference – APAC.
Ms Chu made various observations, including the following:
Ms Chu highlighted three areas of the HKMA’s work where innovation is accelerating the move to next-generation approaches to AML:
|MAS MD Mr Ravi Menon interviewed about cryptoassets
MAS has published the keynote interview Mr Ravi Menon, Managing Director, MAS at the Financial Times’ Crypto & Digital Assets Summit. Mr Menon spoke about MAS’ approach to the crypto ecosystem and the expectations of crypto service licensees, as well as MAS’ stance on central bank digital currencies (CBDCs) and decentralised finance (DeFi).
A recording of the interview is also available. [27 Apr 2022]
|BSP announces pilot of wholesale CBDC
The Bangko Sentral ng Pilipinas (BSP) has announced that it plans to pilot a wholesale central bank digital currency (CBDC) as part of its efforts to promote the stability of the country’s payment system. Dubbed Project CBDCPh, the pilot will test the use of CBDCs for large-value financial transactions on a 24/7 basis across a limited number of financial institutions. [26 Apr 2022]