In this regular update, we round-up FinTech-related regulatory developments for the week ending 6 November 2020.



Covid-19: FCA PS20/14 on ESEF implementation and Covid-19 measures

The FCA has published a policy statement (PS20/14) relating to the delay to the implementation of European Single Electronic Format (ESEF) mandatory requirements and an update on Covid-19-related measures regarding listed companies’ publication of financial statements. The key points are as follows:

  • ESEF requirements relating to the publication and filing of machine-readable financial statements – originally scheduled for financial years starting on or after 1 January 2020, these requirements have been pushed back by 1 year. These requirements will now apply to financial years starting on or after 1 January 2021. However, issuers will still be able to publish and file their financial reports in ESEF voluntarily for financial years starting on or after 1 January 2020, from January 2021, if they choose to do so;
  • ESEF requirement relating to the electronic tagging of basic financial statements and notes to financial statements – this requirement has been kept to the existing timetable and will apply to financial years starting on or after January 2022; and
  • Covid-19-related measures to extend deadlines for the publication by listed companies of financial statements – temporary relief for delayed publication of such statements will, at a minimum, continue to be available to listed companies with financial periods ending before April 2021. These include measures relating to the deadlines attached to both annual and half-yearly financial statements, as well as a series of other measures aimed mainly at companies seeking to raise additional capital. The FCA will keep these measures under review.

PS20/14 also provides feedback to consultation paper 20/12 (CP20/12). The FCA has also published the following Instruments:





EU Exit: FCA PS20/13 – Amendments to the open banking identification requirements (eIDAS certificate)

The FCA has published a policy statement (PS20/13) that sets out changes to the open banking identification requirements, which are intended to limit the risk of disruption to open banking following EU Exit. PS20/13:

  • contains near final rules to amend Article 34(1) of the UK-RTS, with minor changes to the proposal in consultation paper 20/18 (CP20/18); and
  • outlines feedback to CP20/18.

The changes will permit UK-based third-party providers (TPPs) to use an alternative to eIDAS certificates to access customer account information from account providers, or initiate payments, after EU Exit.

Firms must review the changes immediately and implement any necessary changes as soon as possible to ensure they can continue to provide open banking services. The FCA will provide a transition period until the end of June 2021 for complying with its rules. [3 Nov 2020]




Hong Kong

FSTB consults on proposed enhancements to AMLO

The Financial Services and the Treasury Bureau (FSTB) has launched a consultation on legislative proposals to enhance anti-money laundering and counter-terrorist financing regulation in Hong Kong, via amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO).  The consultation will close on 31 January 2021.

The consultation paper sets out the conceptual framework and key parameters of the legislative proposals, aimed at bringing Hong Kong’s regulatory regime in line with the latest international requirements promulgated by the Financial Action Task Force.  The Insurance Authority has published a circular to inform insurance institutions about the consultation.

The proposed enhancements to the AMLO will:

  • introduce a licensing regime for virtual asset services providers (VASPs), requiring persons seeking to conduct the regulated business of virtual asset trading platforms in Hong Kong to apply for an SFC license, granted only if they meet a fit-and-proper test, with licensed VASPs being subject to relevant requirements under the AMLO;
  • introduce a two-tier registration regime for dealers in precious metals and stones (DPMSs);
  • empower the SFC and the Commissioner for Customs and Excise to supervise the compliance of VASPs and DPMSs with the AMLO; and
  • incorporate miscellaneous technical amendments to the AMLO, such as amending the definitions of “politically exposed person” and “beneficial owner”, and providing for the use of digital identification schemes where a customer is not physically present for identification and verification purposes.

In his keynote address at Hong Kong FinTech Week 2020, Mr Ashley Alder (SFC CEO) discussed the proposed licensing regime for VASPs, elaborating that the proposed regime will operate in parallel with the existing opt-in framework for virtual asset trading platforms introduced last year.  The two regimes will impose the same regulatory standards, benchmarked against regulatory principles which apply to securities brokers and other trading venues.  Mr Alder also discussed the regulation of security tokens and fintech more broadly.  [3 Nov 2020]






HKMA launches Cybersecurity Fortification Initiative 2.0

The HKMA has announced the launch of the enhanced Cybersecurity Fortification Initiative 2.0, following a holistic review through market studies, interviews, surveys, and industry consultation.

The Cybersecurity Fortification Initiative was introduced in 2016 with the aim of raising the cyber resilience of Hong Kong’s banking system.  It is underpinned by three pillars – the Cyber Resilience Assessment Framework (C-RAF), the Professional Development Programme (PDP) and the Cyber Intelligence Sharing Platform (CISP).

The HKMA has published a circular with details of the Cybersecurity Fortification Initiative 2.0 and the implementation timeframe.  Among other things:

  • recent international sound practices on cyber incident response and recovery have been incorporated into the enhanced control principles under the C-RAF;
  • the certification list for the PDP has been expanded to include equivalent qualifications in major overseas jurisdictions; and
  • the HKMA has put forward a series of recommendations to the Hong Kong Association of Banks to make the CISP more user-friendly.

The Cybersecurity Fortification Initiative 2.0 will come into effect on 1 January 2021.  The HKMA will continue its phased approach to implementation, dividing authorised institutions into three groups, with different timeframes for completing the C-RAF assessments.  The HKMA will inform authorised institutions individually of their assigned grouping.  [3 Nov 2020]


HKMA announces upcoming initiatives to foster fintech ecosystem and support corporates

The HKMA has announced a range of initiatives at the Hong Kong FinTech Week 2020, which are aimed at further fostering the fintech ecosystem and supporting corporates, particularly small and medium sized enterprises (SMEs):

  • Regtech roadmap – The HKMA has developed a two-year roadmap to further promote regtech adoption in the banking sector, set out in a white paper.  See further details in the update below headed “HKMA announces two-year regtech adoption roadmap”.
  • Facilitating SME financing using data – The HKMA is exploring a new data strategy and a financial infrastructure known as the Commercial Data Interchange, which aims to increase efficiency in financial intermediation and enhance financial inclusion in Hong Kong.  The HKMA is conducting a proof-of-concept study in collaboration with banks.  See further details in the update below headed “HKMA exploring new financial infrastructure to facilitate SME financing – CDI”.
  • Facilitating the digitalisation of trade finance – Phase 1 of the proof-of-concept on the connection of Hong Kong’s eTradeConnect and the People’s Bank of China Trade Finance Platform has been successfully completed, and a pilot run took place in October 2020 to allow banks to use the connection to execute cross-border trade finance transactions.  Phase 2 of the proof-of-concept is tentatively scheduled for early 2021 and will cover more types of trade activities and financing products.
  • Research on Central Bank Digital Currency (CBDC) – Project Inthanon-LionRock, a joint study on the application of CBDC to cross-border payments carried out by the HKMA and the Bank of Thailand, has entered the second phase.  The two authorities aim to explore business use cases in cross-border trade settlement and capital market transactions.  Project findings are expected to be delivered in the first quarter of 2021.

In his keynote speech at the Hong Kong FinTech Week 2020, Mr Eddie Yue (Chief Executive of the HKMA) discussed the CBDC, the potential Commercial Data Interchange, and the banking industry’s fintech journey more generally.  [2 Nov 2020]




HKMA announces two-year regtech adoption roadmap

The HKMA has announced that it has developed a two-year roadmap to promote regtech adoption in the Hong Kong banking sector, as set out a white paper jointly published with KPMG, “Transforming Risk Management and Compliance: Harnessing the Power of Regtech”.  The initiative is also discussed by Mr Arthur Yuen (Deputy Chief Executive of the HKMA) in his speech at the Hong Kong FinTech Week 2020.

The HKMA’s roadmap has been developed with reference to the 16 recommendations in the white paper, spanning across five core areas:

  • boosting awareness by issuing practical guidance and organising targeted events;
  • promoting innovation among the local and global regtech community and facilitating access to infrastructure;
  • enhancing regulatory engagement with the regtech ecosystem through ongoing dialogue and collaboration;
  • developing the talent pool by formalising a regtech training and skills framework; and
  • sustaining adoption via continued industry engagement and effective tracking of progress.

The HKMA will roll out a series of events and initiatives in the coming two years to implement the recommendations, such as:

  • hosting a large-scale event to raise the banking sector’s awareness of the potential of regtech;
  • launching a Regtech Adoption Index;
  • organising a Global Regtech Challenge to stimulate innovation;
  • publishing a “Regtech Adoption Practice Guides” series;
  • creating a centralised “Regtech Knowledge Hub” to encourage information sharing; and
  • establishing a regtech skills framework to develop talent.

In his speech, Mr Yuen sets out the HKMA’s “Regtech 2025” – four key goals to achieve by 2025:

  • Lead: Hong Kong to become one of the global regtech leaders by 2025;
  • Adopt: Regtech to be extensively adopted by the Hong Kong banking sector in the next few years;
  • Grow: Hong Kong to be a breeding ground for regtech solutions for financial institutions; and
  • Nurture: Hong Kong to emerge as a hub for nurturing regtech talent.  [2 Nov 2020]


HKMA exploring new financial infrastructure to facilitate SME financing – CDI

The HKMA has announced that it is exploring a new data strategy and a financial infrastructure known as the Commercial Data Interchange (CDI), which aims to increase efficiency in financial intermediation and enhance financial inclusion in Hong Kong.  This initiative has also been discussed by Mr Eddie Yue (Chief Executive of the HKMA) in his opening keynote speech at Hong Kong FinTech Week 2020.

Currently, data owners share information with banks via multiple one-to-one connections.  The CDI aims to establish a consent-based common standard for data owners to share their digital footprint with banks through data providers.  Each bank and data provider will have a single connection to the platform, and customers can authorise their own service providers (such as utilities companies and payment gateways) to provide relevant and authenticated data through the platform.  This would provide banks with direct and efficient access to a substantial body of data and enable them to offer suitable services to customers and carry out more precise and objective credit assessments.

In order to test the technical feasibility of the CDI, the HKMA is conducting a proof-of-concept study in collaboration with banks, involving the use of trade-related data to facilitate the trade finance application process. The study is expected to be completed by the end of 2020 and the next phase is expected to begin in 2021, covering other commercial data sources which might assist with alternative credit scoring processes carried out by banks.  The HKMA has published the findings of a study assisted by the Hong Kong Applied Science and Technology to look into the use of artificial intelligence in small and medium-sized enterprise (SME) loan applications.  [2 Nov 2020]




SFC announces workshops for licence applicants and holders and their professional advisers regarding revamped online portal

The SFC has issued a circular announcing that it will be arranging workshops on 26 and 30 November and 2 December 2020 to introduce a revamped version of its online portal, WINGS 2.0.  The workshop on 2 December 2020 is targeted at professional advisers, such as compliance consultants and lawyers.  Interested parties may enrol via this webpage by 13 November 2020.

WINGS 2.0 is designed to improve the efficiency and transparency of the SFC’s licensing process, which will eventually become paperless.  New features include web-based licensing forms and electronic signing of licensing applications.  During an initial phase starting from December 2020, licence applicants, licensees, registrants, as well as their professional advisers, will be able to activate or create an account on WINGS 2.0 and try out the new features.  [3 Nov 2020]




Hong Kong holds fourth financial dialogue with Switzerland

The HKMA has announced the completion of its fourth financial dialogue with Switzerland.  The dialogue, held virtually, was co-organised by the HKMA and the State Secretariat for International Financial Matters (SIF) under the Swiss Federal Department of Finance.  Its aim is to deepen financial services collaboration between Hong Kong and Switzerland and facilitate the exchange of views concerning the global financial system.

The HKMA and the SIF:

  • discussed the latest developments in sustainable finance and fintech, opportunities arising from Hong Kong’s latest measures in support of the development of the private equity industry, and the Connect schemes between Hong Kong and Mainland China; and
  • exchanged views on international cooperation issues such as the work of the Bank for International Settlements Innovation Hub Centre and the Financial Stability Board.  [3 Nov 2020].


SFC to hold AML/CFT webinars in December 2020

The SFC has published a circular to inform licensed corporations and associated entities that it will be hosting two sessions of anti-money laundering and counter-financing of terrorism (AML/CFT) webinars on 4 December and 7 December 2020.

The webinar will cover the following (see rundown and speakers):

  • Update on major AML/CFT regulatory developments – presented by the SFC;
  • Legal obligations, case study and trend analysis, and feedback on suspicious transaction reporting of the securities sector – presented by the Joint Financial Intelligence Unit of the Police; and
  • Empowering management of financial crime risk with technology – presented by Ping An Insurance (Group) Company of China, Ltd.

Licensed corporations and associated entities are invited to nominate relevant management or supervisory personnel and compliance officers to attend, subject to a maximum of two representatives per firm.  Enrolment can be made via this link on or before 18 November 2020.  Places are allocated on a first come first served basis to the first nominees on the enrolment forms, with any remaining places allocated to the second nominees.  [6 Nov 2020]




MAS provides Explanatory Brief for Payment Services (Amendment) Bill – VASPs and DPTs

The Monetary Authority of Singapore (MAS) has published the Explanatory Brief for the Payment Services (Amendment) Bill.

MAS currently regulates the provision of payment services under the Payment Services Act 2019 (PS Act). Payment services providers are required to take steps to mitigate key risks and concerns relating to money laundering and terrorist financing (ML/TF), loss of money owed to consumers or merchants due to insolvency, fragmentation and limitations to interoperability, and technology and cyber risks. MAS is introducing legislative amendments to the PS Act to implement the enhanced international standards adopted by the Financial Action Task Force (FATF) in June 2019 that are aimed at addressing the ML/TF risks posed by virtual asset service providers (VASPs) that are not already regulated as financial institutions.

Aside from amendments related to anti-money laundering and countering terrorist financing, MAS proposes to introduce powers to impose measures on digital payment token (DPT) service providers and make other miscellaneous amendments to the PS Act. [2 Nov 2020]


#Virtual Assets







SEBI issues advisory for financial sector organisations regarding SaaS based solutions

SEBI has released a Circular following information received that the financial sector institutions are availing or thinking of availing Software as a Service (SaaS) based solutions for managing their Governance, Risk & Compliance (GRC) functions so as to improve their cyber security posture.

In light of the risks to data safety and security, a government advisory has been issued for Financial Sector organizations. The advisory, forming Annexure A to SEBI’s Circular, comes into force with immediate effect.

The compliance with the advisory is to be reported in the half yearly report by stock brokers and DP to stock exchanges and depositories respectively and by direct intermediaries to SEBI with an undertaking, ‘Compliance of the SEBI circular for Advisory for Financial Sector Organizations regarding Software as a Service (SaaS) based solutions has been made.’ [3 Nov 2020]







Covid-19: SECP announces online and manual submission of forms/notices pursuant to MC No. 28

SECP has announced that the online submission of forms/notices pursuant to Memorandum Circular (MC) No. 28, series of 2020, which requires corporations, partnerships, associations and individuals to create/and or designate email account address and cellphone numbers for transactions with the Commission, shall be filed through the electronic mail [email protected]. Additionally, SECP provides an address for hard copies of said forms/notices to be filed. [4 Nov 2020]





CFTC and SARB Sign Statement of Intent on FinTech Innovation

The CFTC and South African Reserve Bank (SARB) have announced the signing of a Statement of Intent to cooperate and support innovation through each authority’s respective financial technology (FinTech) initiative, namely LabCFTC and the SARB’s FinTech Unit. The Statement of Intent:

  • focuses on information sharing regarding FinTech market trends and developments; and
  • is designed to facilitate referrals of FinTech businesses and the sharing of information and insights derived from each authority’s experiences and relevant events, proofs of concept, trials, or innovation competitions. [2 Nov 2020]
Fed, FDIC and OCC: Interagency Paper on Sound Practices to Strengthen OpRes

The FedFDIC and OCC have issued an interagency paper (and accompanying explanatory note) entitled ‘Sound Practices to Strengthen Operational Resilience’ (OpRes). Directed specifically at the largest and most complex US firms – namely domestic banks with more than $250 billion in total consolidated assets or banks with more than $100 billion in total assets and other risk characteristics – the sound practices are drawn from existing regulations, guidance, and statements as well as common industry standards that address operational risk management, business continuity management, third-party risk management, cybersecurity risk management, and recovery and resolution planning.

The guidance does not amend, expand, or alter existing regulations or guidance.

The Fed has published a related letter from Michael S Gibson, Director of the Division of Supervision and Regulation, to the officer in charge of supervision at each Fed Bank. [2 Nov 2020]

Covid-19: SEC Agenda for Special AMAC Meeting on November 5, 2020

The SEC has released the agenda for the Asset Management Advisory Committee’s (AMAC) special meeting on November 5, 2020. AMAC will consider recommendations concerning Covid-19-related operational issues, which may include electronic delivery, remote work, e-authorization, and dematerialization. [29 Oct 2020]


Fed Publishes Non-Cash Payments Data from 2019 FRPS

The Fed has published detailed non-cash payments data from the 2019 Fed Payments Study (FRPS). The release includes new information about core noncash payments and some evolving areas of payments in the US. [29 Oct 2020]