Your weekly summary of key regulatory updates in an objective bite-size format, drawing on official news and press releases from 400+ financial services regulators, central banks as well as global and regional standard setters,
At a glance - Highlights by topic
Visit Regxelerator’s new end-to-end automated and AI-powered regulatory news platform for ongoing updates. Legal consummation of merger between Credit Suisse and UBS completed European Single Resolution Board and EBA publish new guidance and guidelines to support banks resolvability capabilities EBA report highlights potential impact of central bank funding repayments and higher interest rates on LCR and NSFR implementation in the EU U.S. OCC identifies key risks and challenges for federal banking system in latest semiannual risk report EBA updates list of other systemically important institutions EBA report finds inadequate AML/CFT internal controls and supervision of EU payment institutions Central Bank of Oman launches advanced electronic program to combat money laundering and terrorism financing New BIS FSI paper explores the evolution of international cyber regulation for banks Bank of Italy publishes paper on quantum safe payment systems Canadian Securities Administrators and U.S. SEC strengthen awareness and education of elderly Canadian Securities Administrators and Council of Insurance Regulators launch Total Cost Reporting Implementation Committee U.S. SEC secures emergency relief to protect customers of Binance U.S. crypto trading platform MAS launches 8th edition of Global FinTech Hackcelerator with focus on AI-enabled solutions BIS Project Rosalind Develops Prototype API Layer for retail CBDC payments and explores over 30 use cases ESMA launches call for evidence to gather industry feedback on integrating sustainability preferences into MiFID II suitability and product governance arrangements Bank of Israel Banking releases directive on principles for effective management of climate-related financial risks IOSCO concludes 48th Annual Meeting in Bangkok EBA and EIOPA release Data Point Modelling Standard 2.0 to improve digital processing of regulatory data ESMA publishes data strategy for 2023-2028 NAIC and IAIS join forces to discuss insurance supervision challenges and opportunities at 2023 Global Seminar in Seattle
Prudential & financial stability
Legal consummation of merger between Credit Suisse and UBS completed
Following the announcement of the merger between Credit Suisse and UBS back in March, Switzerland’s FINMA has confirmed that the legal consummation of the merger has now been completed, establishing the formal basis for the start of the practical integration of the two institutions. As an immediate strategic focus, the merged banks will aim to lower the risks of Credit Suisse’s former investment bank. FINMA on its part will continue to closely supervise the merged large bank during the integration process and has specified the central elements of the regulatory requirements. As already announced, the higher “too big to fail” capital requirements due to the progressive component will fully apply to UBS after an appropriate transitional period. The capital build-up required for this will take place gradually from the end of 2025 and will be completed by the beginning of 2030 at the latest. FINMA will also set additional institution-specific liquidity requirements for the merged bank. Furthermore, measures imposed as a result of enforcement proceedings at Credit Suisse will be maintained until they are implemented in the relevant entities.
European Single Resolution Board and EBA publish new guidance and guidelines to support banks resolvability capabilities
The European Single Resolution Board (SRB) an the European Banking Authority (EBA), respectively, have published new guidance and guidelines with a view to further strengthening EU banks’ resolvability capabilities.
The guidance by the SRB addresses liquidity in resolution data. The guidance builds on the SRB’s previously issued “Expectations for banks” and focuses on three objectives: (1) the expectation that banks have the internal frameworks, governance and management information systems in place to meet the data expectations set out in the guidance; (2) the expectation that banks have developed the capabilities to report a predefined set of data points on their liquidity situation; and (3) the expectation that banks have put in place remedial actions to mitigate any deficiencies in their capabilities to provide these data points.
EBA’s guidelines in turn address resolvability testing. The new guidelines are intended to help evaluate banks in ensuring that the arrangements put in place to support the execution of their resolution strategy are adequate and can be implemented effectively. To that end, the guidelines require institutions to submit a resolvability self-assessment at least every two years, to set out how they meet the resolvability and transferability capabilities and how they have gained assurance of their adequacy. The first self-assessment is expected by year-end 2024.
EBA report highlights potential impact of central bank funding repayments and higher interest rates on LCR and NSFR implementation in the EU
The European Banking Authority (EBA) has published its third Report on the monitoring of liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) implementation in the EU. The report assesses the potential impact of upcoming central bank funding repayments and a higher interest rate environment on LCR and NSFR levels, analyzing the potential liquidity and fundings needs by EU banks to maintain regulatory and prudent LCR and NSFR levels and developing projections for LCR and NSFR values during 2023 and 2024. The report further provides guidance to banks and supervisors on how to monitor liquidity and funding needs, and highlights the importance of banks having realistic funding plans.
U.S. OCC identifies key risks and challenges for federal banking system in latest semiannual risk report
The U.S. Office of the Comptroller of the Currency (OCC) released its Semiannual Risk Perspective for Spring 2023, which identified key risks facing the federal banking system. The report notes that despite the overall strength of the federal banking system remaining sound, liquidity, operational, credit, and compliance risks remain elevated. Among other things, it finds that banks have strengthened their liquidity levels in response to the recent failures by several banks and investment portfolio depreciation brought on by rising long-term rates. On the other hand, credit risk – while currently still at moderate levels – is expected to deteriorate further due to the impact of high inflation and rising interest rates, with stresses in certain segments such as commercial real estate already becoming visible.
The European Banking Authority (EBA) has updated the list of Other Systemically Important Institutions in the EU and the associated capital buffer rate set by the relevant authorities. 180 banks were identified as systemically important in 2022, with buffer rates ranging from 0.25% to 3%.
AML & CFT
EBA report finds inadequate AML/CFT internal controls and supervision of EU payment institutions
The European Banking Authority (EBA) has published a report on money laundering and terrorist financing (ML/TF) risks associated with EU payment institutions. The report found that ML/TF risks in the sector are not being adequately assessed and managed by institutions and their supervisors. The EBA's findings suggest that payment institutions do not have sufficient AML/CFT internal controls to prevent ML/TF and that some competent authorities are not providing adequate supervision. Specific supervisory shortcomings highlighted include inter alia failure to implement risk-based approach to the frequency and intensity of on-site and off-site supervision, deficient assessment of AML/CFT components at the authorization stage and lack of a common approach to the AML/CFT supervision of agent networks used by payment institutions despite their material inherent ML/TF risks.
Central Bank of Oman launches advanced electronic program to combat money laundering and terrorism financing
The Central Bank of Oman (CBO) is launching phase one of an advanced electronic program this week for the use of banks and other licensed financial institutions to analyze money laundering and terrorism financing risks. This program is in line with the Financial Action Task Force (FATF) digital solution papers and includes features such as data collection and analysis, risk-based classification, and comprehensive risk analyses. To ensure proper use of the program, CBO has conducted introductory workshops for all licensed institutions. This program is part of the CBO's efforts to enhance and update anti-money laundering and combating the financing of terrorism efforts in the financial sector.
Cyber & operational resilience
New BIS FSI paper explores the evolution of international cyber regulation for banks
The Bank for International Settlements (BIS) Financial Stability Institute (FSI) has published an updated version of its 2017 paper on the approach to cyber regulations for banks by jurisdictions around the world. The paper examines cyber regulations in 15 advanced and emerging market jurisdictions as well as reviews the efforts by international standard setters and the G7 with a view to achieving greater harmonization in cyber regulation. It finds that bank cyber resilience regulation takes two main forms. The first adapts existing operational risk and information security regulations to include cyber-specific elements. The second involves the creation of comprehensive regulations covering all aspects of cybersecurity, from governance to operational procedures. Under both approaches, the regulations often combine broad cyber resilience principles with a set of baseline requirements in order to counter potential over-prescriptiveness as well as are grounded in the principle of proportionality. According to the authority, recent cyber regulations have evolved into what is referred to as “second-generation" cyber regulations. Unlike "first-generation" regulations, which aimed at establishing a cyber risk management approach and controls, these newer rules adopt an "assume breach" mentality and focus on improving cyber resilience. Key areas of these regulations include cybersecurity strategy, incident reporting, threat intelligence sharing, and resilience testing. Against this backdrop, the paper examines in greater detail regulatory requirements for specific thematic components of cyber regulation including among other things cybersecurity strategy, governance, culture and awareness, cyber incident response and recovery, cyber resilience testing, as well as third-party dependencies.
The Bank of Italy has published a new paper on quantum safe payment systems as part of its series on Markets, Infrastructures, and Payment Systems. The paper examines the use of quantum technologies and algorithms to create cryptographic schemes that would contribute to making the European payment system infrastructure resistant against potential future attacks carried out by means of quantum computers.
Conduct & consumer protection
Canadian Securities Administrators and Council of Insurance Regulators launch Total Cost Reporting Implementation Committee
The Canadian Securities Administrators (CSA) and the Canadian Council of Insurance Regulators (CCIR) have announced the launch of a Total Cost Reporting Implementation Committee (the Committee) with the participation of the Canadian Investment Regulatory Organization (CIRO). The Committee will support industry stakeholders in implementing the recently announced Total Cost Reporting enhancements, which are intended to improve the transparency of total fees and costs to holders of investment funds and segregated funds, by providing guidance and responding to questions. The Total Cost Reporting enhancements will be implemented by December 31, 2025, and the first enhanced annual reports to clients and policyholders will be delivered for the calendar year ending December 31, 2026.
Canadian Securities Administrators and U.S. SEC strengthen awareness and education of elderly
On the occasion of World Elder Abuse Awareness Day, the Canadian Securities Administrators (CSA) and the U.S. Securities and Exchange Commission (SEC) have reinforced their efforts to raise awareness of financial abuse experienced by the elderly and strengthen their education. The CSA have reminded of the steps that older individuals can take to protect themselves, such as being careful of imposters posing as loved ones asking for money, exercising caution when approached with investment opportunities by individuals met through social media and assigning a trusted contact person to their financial accounts. The U.S. SEC on its part has launched a dedicated new public service campaign consisting of a TV spot, informational videos, and new resource pages in English and Spanish, which are intended to provide older investors with information about investing in retirement, spotting fraud, and doing background checks on investment professionals.
Fintech & ecosystem innovation
U.S. SEC secures emergency relief to protect customers of Binance U.S. crypto trading platform
Following the enforcement actions initiated against Binance U.S. operations, the U.S. Securities and Exchange Commission (SEC) has secured emergency relief to protect customers of the Binance.US crypto trading platform. The order from the United States District Court for the District of Columbia requires the defendants to repatriate assets held for the benefit of customers and maintain customer assets in the US, thereby ensuring that Binance.US customers are permitted to withdraw their assets from the platform and that the assets remaining on the platform are protected and remain in the U.S.. The order also restricts Binance from spending assets or funds except for ordinary course business expenses and requires Binance to provide the SEC with oversight over such expenses.
MAS launches 8th edition of Global FinTech Hackcelerator with focus on AI-enabled solutions
The Monetary Authority of Singapore (MAS) has launched the 8th edition of the Global FinTech Hackcelerator in cooperation with Oliver Wyman. Under the headline “Artificial Intelligence (AI) in Finance Global Challenge”, the challenge to produce innovative and market-ready AI solutions of transformative character. Interested parties from around the world are invited to submit innovative solutions to address 16 problem statements in four key areas: customer experience, operational efficiency, risk management, and ESG. Up to 20 finalists will be shortlisted to receive a S$20,000 cash stipend and will pitch their solutions at Demo Day as part of the Singapore FinTech Festival. Three winners will be selected, with each receiving S$50,000 in prize money.
Payments & currency
BIS Project Rosalind Develops Prototype API Layer for retail CBDC payments and explores over 30 use cases
The Bank for International Settlements Innovation Hub has concluded Project Rosalind. Project Rosalind, a joint experiment between the Bank for International Settlements and Bank of England, explored how a universal and extensible application programming interface (API) layer could connect central bank and private sector infrastructures and facilitate retail CBDC payments. The project developed a prototype API layer, with 33 API endpoints in six functional categories, which could facilitate retail payments in CBDC. The API layer was tested and validated through more than 30 use cases, such as peer-to-peer transfers, retail payments for goods and services, small-value business transactions, and private sector programmability. The project also highlighted several areas for further exploration, such as how the API might allow the ecosystem to share user and payments data in a privacy-preserving way, the trade-off between extensibility and consistency and the need to define the operational roles and responsibilities of all participants in the ecosystem.
European Commission releases comprehensive package to strengthen EU sustainable finance framework
In an effort to further strengthen the EU sustainable finance framework, the European Commission has released a comprehensive new package of measures. This includes an expansion to the EU Taxonomy with the introduction of new criteria for economic activities that significantly contribute to non-climate environmental objectives and broadening the range of economic activities and sectors that contribute to climate change mitigation as well as proposed new regulations for ESG rating providers aimed at improving the reliability and transparency of ESG ratings activities and requiring providers to be authorised and supervised by the European Securities and Markets Authority. To address implementation challenges, the Commission has also released a range of measures and tools, including the EU Taxonomy User Guide, to enhance the framework's applicability.
ESMA launches call for evidence to gather industry feedback on integrating sustainability preferences into MiFID II suitability and product governance arrangements
The European Securities and Markets Authority (ESMA) has launched a Call for Evidence to gather industry feedback on integrating sustainability preferences into suitability assessment and product governance arrangements under MiFID II. The Call for Evidence seeks to help ESMA better understand how MiFID II requirements are being implemented and applied by firms, gain a better understanding of investor experience and reactions to the inclusion of sustainability factors, and collect information, views and data on main trends related to sustainable investment products and services. Among other things, questions address how actions did firms implement within their organisation to take into account the new requirements related to sustainability preferences (e.g. through staff training), how firms communicate information on sustainable finance to retail investors and collect their preferences as well as challenges that retail investors have experienced in understanding sustainability risks and factors and articulating their preferences.
The Banking Supervision Department of the Bank of Israel has released a proper conduct of banking business directive on the “Principles for effective management of climate-related financial risks” to the banking system. The directive is based on the document published by the Basel Committee in June 2022 and includes 12 principles providing guidelines to banks on corporate governance, internal audit, capital adequacy and liquidity, risk management, monitoring and reporting, and the combination of traditional and climate-related risks.
Other transversal themes
IOSCO concludes 48th Annual Meeting in Bangkok
The International Organization of Securities Commissions (IOSCO) concluded its 48th Annual Meeting, hosted by the Securities and Exchange Commission of Thailand in Bangkok and bringing together over 380 delegates from across the world. The meeting served as a platform for members to convene, discuss market developments, share knowledge, foster collaboration and agree on common positions. Focus topics included among other things sustainable finance, digital assets, private finance, liquidity risk management, CCP margin requirements, decentralized finance, leveraged loans and benchmarks. In addition, the Commission discussed and outlined next steps to drive forward its market development and capacity building initiatives in emerging markets.
EBA and EIOPA release Data Point Modelling Standard 2.0 to improve digital processing of regulatory data
The European Banking Authority (EBA) and the European Insurance and Occupational Pension Authority (EIOPA) have released the Data Point Modelling (DPM) Standard 2.0.The new standard comes in response to the challenges of increased volume, granularity, and complexity of the data and lays the foundation for a robust and future-proof data dictionary, supported by adequate management tools. The DPM Standard 2.0 supports the whole reporting lifecycle, from data definition to data exploration, and aims to reap the benefits of stronger collaboration and higher harmonization while also improving the digital processing of regulatory data required by the authorities. It is also expected to play a key role in the construction of a single cross-sectoral dictionary for the whole financial sector. The EBA and EIOPA have also published the revised version of the XBRL taxonomy architecture to implement the improvements introduced by the new Standard. A fact sheet with details on the DPM Standard 2.0 can be found .
ESMA publishes data strategy for 2023-2028
The European Securities and Markets Authority has released its data strategy for the period up until 2028. The new strategy, which among other things seeks to facilitate the use of new data-related technologies as well as reduce reporting compliance costs, is built around six cornerstones. These include (1) becoming an enhanced data hub through improved information accessibility, interoperability and usability, (2) ensuring access to data of public interest to market participants in machine readable formats and via user-friendly search and analytical interfaces, (3) promoting data-driven supervision including through the use of novel technologies, (4) increasing data collaboration as well as (5) reducing the compliance burden for reporting entities through the reduction of duplicative and inconsistent requirements, improved reporting flows and data sharing, and (6) facilitating the systematic use of data to support evidence-based policy development, supervision and risk assessment.
NAIC and IAIS join forces to discuss insurance supervision challenges and opportunities at 2023 Global Seminar in Seattle
The National Association of Insurance Commissioners (NAIC) hosted the 2023 International Association of Insurance Supervisors (IAIS) Global Seminar in Seattle, Washington on June 15-16. The event brought together insurance supervisors from the U.S. and around the world, as well as industry representatives and other stakeholders, to discuss the challenges and opportunities facing insurance supervisors, consumers, and the industry. The agenda included speeches and panel discussions on topics such as InsurTech developments, integrating climate risk into supervisory practices, emerging risks in the global insurance sector, and the insurance capital standard. The event concluded with IAIS Secretary General Jonathan Dixon previewing the IAIS Annual Meeting in Tokyo this November.
The Hellenic Capital Market Commission (HCMC) and the Bangladesh Securities and Exchange Commission (BSEC) have signed a bilateral MoU to expand cooperation for exchanging confidential information and providing mutual assistance in capital market matters.
The Hong Kong Securities and Futures Commission and the China Securities Regulatory Commission, at their 13th high-level meeting on regulatory cooperation, have agreed to further deepen their cooperation through expanded mutual market access schemes, strengthened cooperation on the derivatives market and asset management industry, and in relation to other capital markets initiatives.
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