In this regular update, we round-up FinTech-related regulatory developments for the week ending 14 April 2022.

 

Global

FSI: Insight on CBDCs

The Bank of International Settlements’ (BIS) Financial Stability Institute (FSI) has published an Insight (and executive summary) on central bank digital currencies (CBDCs). The Insight draws on interviews with nine central banks with advanced work on CBDCs and financial inclusion, as well as ongoing research and policy work at the BIS and World Bank. It gives concrete examples from the central banks’ work and discusses challenges, risks and regulatory and legal implications. It aims to facilitate peer learning on a key set of issues around CBDCs and financial inclusion policy faced by societies around the world. [14 Apr 2022]

#CBDCs

 

UK

BoE: CPs on FMI outsourcing and third party risk management 

The Bank of England has published three Consultation Papers (CPs) on its proposals around outsourcing and third party risk management in financial market infrastructures (FMI). The proposals are set out in three draft supervisory statements (SS) for central counterparties (CCPs), central securities depositories (CSDs), and recognised payment system operators (RPSOs) and specified service providers (SSPs). The CPs aim to:

  • facilitate greater resilience and adoption of the cloud and other new technologies as set out in the BoE’s response to the Future of Finance (FoF) report;
  • set out the BoE’s requirements and expectations in relation to outsourcing and third party risk management in FMIs; and
  • complement the BoE’s SSs on FMI operational resilience.

In particular, the BoE is proposing to develop an outsourcing and third party risk management part to add to the Code of Practice that will apply to relevant RPSOs and SSPs.

Feedback is requested by 14 July 2022. [14 Apr 2022]

#Outsourcing

#ThirdPartyRiskManagement

#FMI

BoE: Update on joint data collection transformation programme

The Bank of England (BoE) has published an update on the joint BoE and FCA data collection transformation programme, and the achievements since its last communication in February 2022. Key updates for phase one (P1) and phase two (P2) are highlighted below:

  • P1 – no extention of the ‘discovery and design’ stage for the commercial real estate (CRE) use case due to a lack of resource;
  • P1 – a focus on de-risking the transformation journey from April to end of June 2022;
  • P1 – recommendations based on the phase one ‘discovery and design’ stage and the BoE’s and FCA’s response to the recommendations are expected in July 2022;
  • P2 – pushing back the start of P2 from June 2022 until September 2022;
  • P2 – use cases have been selected;
  • P2 – the BoE is looking for 20 FTE from firms to be part of the core delivery team from September 2022 until the end of May 2023; and
  • P2 – nominations for the P2 process opens on 27 April 2022. [13 Apr 2022]
#Data

#JointTransformationProgramme

 

EU

ESAs: Report on risks and vulnerabilities in the EU financial system 

The European Supervisory Authorities (ESAs) have published their first joint risk assessment report for 2022. The report highlights the increasing vulnerabilities across the financial sector as well as the rise of environmental and cyber risks. In the report, the ESAs advise national competent authorities, financial institutions and market participants to consider the elevated level and frequency of cyber incidents. It also notes that financial institutions should strengthen their cyber resilience and prepare for a potential increase in cyberattacks. [13 Apr 2022]

#CyberRisk
ECB: Opinion on a proposal for a directive on measures for a high common level of cybersecurity

The European Central Bank (ECB) has published an opinion on a proposal for a directive on measures for a high common level of cybersecurity across the EU, and repealing Network and Information Security Directive (NIS). The ECB welcomes the proposed directive and recognises that it will increase the level of cyber resilience across all relevant sectors, reduce inconsistencies across the internal market and improve the level of situational awareness and the collective capability to prepare and respond by ensuring efficient cooperation in the EU. The ECB makes observations in relation to the scope of the proposed directive; the European System of Central Banks (ESCB) and Eurosystem oversight competences; and ICT third-party risk, management of large-scale incidents and crises, information-sharing and national cybersecurity strategy. [13 Apr 2022] 

#CyberSecurity 

 

Singapore

MAS announces Australia-Singapore FinTech Bridge Agreement

In a press release, MAS has announced that it has signed the Australia-Singapore FinTech Bridge Agreement with the Australia Treasury. The Australia-Singapore FinTech Bridge sets out a framework to:

  • deepen bilateral and multilateral cooperation on FinTech, to facilitate trade, investment and ecosystem development in the FinTech sector;
  • support the mutual establishment of FinTechs looking to expand in each other’s markets, and to encourage FinTechs to use the facilities and assistance available to explore new business opportunities and reduce barriers to entry;
  • build on current engagements to strengthen linkages between Australia and Singapore for policy officials, regulators, and industry groups; and to work together to share FinTech expertise and encourage the development of new opportunities; and
  • explore joint innovation projects on emerging issues in FinTech to help the industry navigate through a constantly evolving space, to share information on emerging market trends, and to learn from the experiences in each jurisdiction. This includes collaboration in areas such as blockchain and distributed ledger technology, digital identities, cross-border data connectivity, data portability, and the application of FinTech to promote sustainable finance.  [13 Apr 2022]
#FinTech

#Digital

#Innovation

#DLT

MAS: Joint Statement of the 8th AFMGM

MAS has published the Joint Statement of the 8th ASEAN Finance Ministers’ and Central Bank Governors’ Meeting (AFMGM) which was hosted by Cambodia. The statement covers the range of topics discussed at the meeting, including cyber resilience, financial inclusion, infrastructure financing, payment connectivity and more.

With particular regard to sustainable finance, the AFMGM commended the progress made by the ASEAN Taxonomy Board (ATB) toward the development of an ASEAN Taxonomy for Sustainable Finance. Attendees also noted the ATB’s intention to commence stakeholder consultation in advance of further development of the taxonomy.  In addition, the Meeting recognised the work undertaken by the Joint Sustainable Finance Working Group (JSFWG) Industry Advisory Panel (IAP), and indicated that the publication of IAP white papers in the coming months was anticipated. The statement catalogues a number of other green and sustainability initiatives currently underway.

On digital assets, the AFMGM welcomed the initiatives to include a standing agenda item in the ASEAN Capital Market Forum’s (ACMF’s) agenda to exchange information and views on the regulation and developments in this. The Meeting also encouraged the exchange of views on digital asset developments among the relevant ASEAN working committees.  [8 Apr 2022]

#CyberResilience

#Payments

#DigitalAssets

 

Philippines

BSP: New multi-sector working groups to support financial inclusion

The Bangko Sentral ng Pilipinas (BSP) has announced that the Financial Inclusion Steering Committee (FISC) has established working groups to drive timely implementation of priority initiatives under the National Strategy for Financial Inclusion (NSFI) 2022-2028. The FISC has appointed the BSP to chair the working group on digital finance.  All working groups are expected to convene in May 2022.  [12 Apr 2022]

#DigitalFinance

 

Ukraine-related sanctions

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


Disclaimer

Herbert Smith Freehills LLP is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary.