The global financial sector is constantly changing, formed by a complex tapestry of regulations. Staying up to date on these changes is not just a necessity for market participants, but also a strategic imperative. Each legislative change could modify compliance frameworks, adjust risk profiles, and redefine operational best practices. In this week’s roundup, we look at the latest regulatory developments that are likely to affect the financial sector. By breaking down these developments, we hope to provide professionals with the knowledge they need to manage the complicated regulatory landscape and maintain a competitive edge in an increasingly dynamic market.
Business Line | Country | Regulator | Regulatory Update | Summary |
All | Australia | Treasury | Consultation on Amendments to Consumer Data Right (CDR) Rules | The Australian Treasury has released a consultation paper on proposed amendments to the Consumer Data Right (CDR) Rules, focusing on enhancing consent processes and operational efficiency. The proposed changes include simplifying the consumer consent process by allowing the bundling of consents for necessary services, pre-selecting consent elements essential for service provision, and streamlining the withdrawal and notification procedures. Additionally, the amendments aim to enhance the operational aspects of the CDR by facilitating the appointment of nominated representatives, expanding the circumstances under which accredited data holders can retain CDR data, and introducing exemptions for certain energy sector trial products. The consultation seeks stakeholder feedback on the potential benefits, challenges, and regulatory impacts of these proposed changes, with the goal of making the CDR framework more user-friendly while maintaining robust consumer protections. Submissions are due by September 9, 2024. |
Australia | ASIC | Key Regulatory Developments Impacting AFS Licensees and Financial Advisers | ASIC has provided a comprehensive overview of critical regulatory developments affecting Australian Financial Services (AFS) licensees and financial advisers. The update emphasizes the importance of maintaining accurate records on the financial advisers register, highlighting common errors related to the recording of qualifications and the legal implications of providing incorrect information. Additionally, it discusses the assessment of adviser qualifications in line with the Corporations Act 2001, particularly focusing on the compliance with the ‘qualifications standard’ for both existing and new advisers. ASIC’s ongoing review of cold calling practices in superannuation switching models is also underscored, with a focus on deterring high-pressure sales tactics and protecting consumers. Furthermore, the update addresses cyber security risks associated with third-party exposures, urging AFS licensees to strengthen their defences against supply chain vulnerabilities. The update also covers the newly introduced financial adviser registration requirement, effective from 16 February 2024, and ASIC’s initiatives to ensure compliance. | |
United States | CFTC | The Commodity Futures Trading Commission (CFTC) has approved a joint proposal aimed at establishing uniform technical data reporting standards in collaboration with several key financial regulatory agencies. This initiative, which aligns with the Financial Data Transparency Act of 2022 (FDTA), seeks to standardize the collection and transmission of financial data across agencies including the Federal Reserve, SEC, FDIC, and others. The proposal advocates for the use of common identifiers for legal entities and financial instruments, promoting interoperability and consistency in financial regulatory data. Stakeholders are invited to provide their feedback within 60 days of the proposal’s publication in the Federal Register, marking a significant step towards enhancing data transparency and regulatory efficiency in the financial sector. | ||
United States | Federal Register | Final Rule on Quality Control Standards for Automated Valuation Models (AVMs) | The U.S. financial regulatory agencies, including the OCC, FDIC, and CFPB, have finalized a rule under the Dodd-Frank Act requiring mortgage originators and secondary market issuers to implement quality control standards for Automated Valuation Models (AVMs) used in determining mortgage collateral value. Effective October 1, 2025, these institutions must adopt policies to ensure AVMs produce reliable estimates, protect against data manipulation, avoid conflicts of interest, and comply with non-discrimination laws. The rule allows flexibility for institutions to adapt their control systems according to their size, complexity, and risk profile while encouraging collaboration with AVM developers to meet compliance requirements. | |
Banking | United Kingdom | FRC | The Financial Reporting Council (FRC) has released an Exposure Draft in August 2024 proposing revised guidance on the Going Concern Basis of Accounting, which includes considerations for solvency and liquidity risks. This draft aims to replace the 2016 guidance and is designed to support companies in evaluating their ability to continue as a going concern. It integrates updates from recent developments in corporate reporting and auditing standards, emphasizing high-quality, company-specific disclosures. The guidance, while non-mandatory, serves as a practical tool for directors to assess and report on their company’s financial health and associated risks. Feedback is requested by October 28, 2024. | |
United States | Federal Reserve Board | Finalization of Joint Board-FDIC Guidance for Triennial Full Filer Banking Organizations | The Federal Reserve Board and FDIC have finalized joint guidance for triennial full filer banking organizations, which includes domestic and foreign Category II and III banks. This guidance outlines the expectations for future resolution plans, emphasizing the need for comprehensive strategies to ensure orderly resolution in case of failure. Additionally, the deadline for submitting full resolution plans has been extended from March 31, 2025, to October 1, 2025. The guidance addresses issues identified from previous resolution plans and recent financial stress events, ensuring banks have adequate time to incorporate these guidelines. | |
Insurance | European Union | European Commission | The European Commission adopted a new regulation establishing technical information for calculating technical provisions and basic own funds in accordance with Solvency II Directive 2009/138/EC. The regulation applies to insurance and reinsurance undertakings with reference dates from June 30, 2024, to September 29, 2024. It outlines the relevant risk-free interest rate term structures, matching adjustments, and volatility adjustments for each currency and national insurance market. This regulation is critical for ensuring consistency and legal certainty in financial reporting within the insurance sector across the EU. | |
Global | IAIS | Draft Application Paper on Operational Resilience: Objectives and Toolkit | The International Association of Insurance Supervisors (IAIS) has released a draft application paper aimed at enhancing operational resilience within the insurance sector. This paper provides a comprehensive framework for insurers and supervisors, focusing on governance, risk management, and the management of critical services. It outlines key objectives for insurers, including the integration of operational resilience with existing risk management practices, the establishment of impact tolerances for disruptions, and the effective management of incidents, particularly cyber incidents. The paper also emphasizes the importance of maintaining robust relationships with third-party service providers. For insurance supervisors, the objectives focus on ensuring coordination within supervisory authorities, fostering information sharing and cooperation across jurisdictions, and promoting continuous learning in operational resilience. This draft represents the first phase of a two-part consultation, with the second phase set to develop a toolkit to support the implementation of these objectives. | |
Mauritius | FSC | Public Consultation on Draft Insurance Aggregators Regulations | The Financial Services Commission (FSC) of Mauritius has announced a public consultation on the proposed Insurance (Insurance Aggregators) Regulations, which aims to establish a robust regulatory framework for insurance aggregators within the country’s growing fintech ecosystem. The draft regulations, intended to foster innovation and enhance the insurance sector, are now open for stakeholder feedback until August 23, 2024. These proposed rules are part of Mauritius’s broader strategy to promote a competitive and transparent financial services environment. | |
Investment | Australia | ASIC | The Australian Securities and Investment Commission (ASIC) and the State Securities Commission (SSC) of Viet Nam have signed a historic Memorandum of Understanding (MoU) to bolster cooperation in securities market regulation. Signed on August 2, 2024, the MoU emphasizes enhanced information sharing, technical cooperation, and capacity building between the two nations. Supported by Australia’s Department of Foreign Affairs and Trade, this partnership aims to strengthen Viet Nam’s regulatory framework and capital market resilience, fostering transparent and orderly markets in both countries. | |
Chile | CMF | New Regulations for Corporate Governance and Risk Management | The Financial Market Commission (CMF) of Chile has published a second consultation on regulations concerning corporate governance, risk management, and minimum equity requirements for securities intermediaries, commodities brokers, and other financial entities. The proposed rules establish comprehensive guidelines for operational risk management and introduce a risk management quality assessment methodology. These regulations are aimed at enhancing the stability and transparency of the financial market, with potential increases in equity and collateral requirements based on the entities’ risk management performance. Feedback is open until August 22, 2024. | |
European Union | European Union | Corrigendum to EU Regulation on MREL and TLAC Disclosure Requirements | The European Commission has issued a corrigendum to the Implementing Regulation (EU) 2023/680, which relates to the minimum requirement for own funds and eligible liabilities (MREL) and the total loss-absorbing capacity (TLAC) of banks and financial institutions. The corrigendum introduces Annex IV, which includes detailed instructions and standardized templates for the disclosure of MREL and TLAC metrics. This update aims to clarify reporting obligations, ensuring consistency and transparency across EU financial institutions in their compliance with these critical regulatory standards. | |
Mexico | Banxico | The Bank of Mexico has initiated a public consultation on proposed amendments to the Repo Rules, aimed at regulating hedge funds’ repo operations. This follows recent legislative changes recognizing hedge funds as a distinct category of investment funds. The consultation, open until August 30, 2024, seeks to gather public input on these proposed regulations, which are designed to promote the healthy development of the financial system and protect public interests. The full proposal is available on the Bank of Mexico’s website. | ||
United States | IRS | The IRS has released a draft of the new Form 1099-DA, which brokers will use to report digital asset transactions starting in 2025. This form, set to be finalized in 2026, reflects updated regulations and transitional reliefs for reporting digital asset sales and exchanges. The IRS is seeking public comments on the draft, which aims to improve clarity and compliance in reporting digital asset income. Comments can be submitted via the IRS website, with further instructions for filers expected soon. | ||
United States | Federal Register | The SEC has adopted amendments to the EDGAR Filer Manual, effective August 9, 2024, coinciding with EDGAR Release 24.2. The updates include the addition of forms for security-based swap execution facilities, the removal of obsolete Forms 10-KSB and 10-QSB, and other system enhancements. These changes aim to streamline the filing process and ensure compliance with updated regulatory requirements. The updated manual and associated rules are now incorporated by reference into the Code of Federal Regulations. | ||
United States | Federal Register | New Rules on Dual Consolidated Losses and Disregarded Payments | The IRS has issued proposed regulations addressing issues under the dual consolidated loss rules, focusing on intercompany transactions and stock ownership impacts on dual consolidated losses. The regulations also clarify the application of these rules to certain foreign taxes, ensuring multinational enterprises meet minimum tax levels. Additionally, the regulations introduce rules for disregarded payments that result in losses for foreign tax purposes. Public comments are invited until October 7, 2024. | |
NBFI | Malta | MFSA | European Commission Consultation on Macroprudential Policies for NBFI | The European Commission has launched a consultation to assess the adequacy of macroprudential policies for non-bank financial intermediation (NBFI). This consultation aims to identify vulnerabilities such as liquidity mismatches, excessive leverage, and interconnectedness within the NBFI sector, including insurance, pension funds, and investment services. The feedback gathered will help shape policies for the upcoming 2024-2029 period. NBFI entities are encouraged to submit their responses by November 22, 2024 |
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