This blog offers a detailed overview of the latest regulatory developments in the financial services industry, covering various sectors including banking, insurance, and investment. It captures a broad spectrum of regulations, consultations, and policy actions taken by both national and international authorities for the week of May 21, 2024, highlighting the dynamic evolution of regulatory landscapes to meet emerging challenges and opportunities.
Business Line | Country | Regulator | Regulation/ Rule | Summary |
All | China | CAC.GOV.CN | Provisions on the Security Management of Internet Government Affairs Applications | China issued a new regulation titled “Provisions on the Security Management of Internet Government Affairs Applications,” effective from July 1, 2024. These provisions, formulated by several central government bodies, aim to enhance the security of internet-based government applications. They mandate strict adherence to cybersecurity, data security, and personal information protection laws. The regulations require government and public institutions to secure their websites, mobile apps, and email systems through measures such as domain name restrictions, security certifications, regular security assessments, and data localization. Additionally, these institutions must ensure the integrity of published information and safeguard against unauthorized data access and cyber threats. The regulations also emphasize the importance of real-time security monitoring, emergency response mechanisms, and stringent supervision and accountability frameworks. |
European Union | European Council | The Council of the European Union has formally adopted the Corporate Sustainability Due Diligence Directive, marking the final step in the legislative process. This directive imposes new obligations on large companies to address and mitigate the adverse impacts of their activities on human rights and environmental protection. It encompasses not only the companies’ direct operations but also those of their subsidiaries and business partners throughout their supply chains. Companies with over 1,000 employees and a turnover exceeding €450 million must implement risk-based systems to monitor, prevent, and remedy human rights or environmental damages. They are also required to adopt climate transition plans aligned with the Paris Agreement. Violations of these obligations will result in liabilities and necessitate full compensation for damages caused. The directive will come into force shortly and member states will have two years to comply with its regulations, with phased implementation based on company size. | ||
European Union | European Union | Strengthening Supervision in EU Banking: New Amendments to Directive 2013/36/EU | The European Parliament and Council have recently amended Directive 2013/36/EU, targeting enhanced supervisory powers, sanctions, and the regulation of third-country branches, while also integrating environmental, social, and governance (ESG) risks into the framework. This legislative update aims to deepen the internal market for banking by ensuring that supervision is applied proportionately across institutions, particularly reducing compliance costs for smaller entities. The amendments stipulate more robust independence requirements for competent authorities to prevent conflicts of interest and promote integrity in financial systems. Additionally, the directive imposes stricter conditions on non-EU banks operating within the EU, requiring them to establish branches in accordance with Union law, thereby strengthening oversight and ensuring financial stability across member states. | |
European Union | European Council | Priorities for the EU’s Digital Policy in the Next Legislative Cycle | The European Council has formalized its conclusions on the future of EU digital policy, setting the stage for the next legislative cycle. Recognizing the profound impact of digital transformation on EU citizens and businesses, the Council aims to address the opportunities and challenges of the digital era. Key priorities include fostering a safe, inclusive, and human-centric digital environment that upholds democracy and human rights. Emphasis is placed on ensuring no one is left behind by promoting essential digital skills for all Europeans. The Council highlights the need for a common European approach to digital technologies, balancing innovation with regulatory measures to protect economic security and maintain competitiveness. The digital transition is to be closely aligned with the green transition, targeting sustainability, and reducing administrative burdens for public and private sectors. Furthermore, the Council underscores the importance of secure digital infrastructure and an internationally proactive EU digital policy, advocating for strengthened digital partnerships and trade agreements to enhance the EU’s global role in digital governance and transformation. | |
European Union | European Council | EU Approves Landmark AI Act to Regulate Artificial Intelligence | The Council has given its final approval to the pioneering Artificial Intelligence (AI) Act, establishing the first global framework to regulate AI based on a risk-based approach. This landmark legislation aims to harmonize AI rules across the EU, ensuring the development of safe, trustworthy AI systems while respecting fundamental rights and fostering innovation. The Act categorizes AI systems by risk levels, imposing stringent requirements on high-risk AI applications and banning those deemed unacceptable, such as social scoring and predictive policing. It includes provisions for transparency, governance, and penalties, and supports innovation through regulatory sandboxes. This legislation is set to enter into force shortly, with implementation beginning two years thereafter. | |
Global | BIS | The Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) has unveiled its work programme for 2024-25, delineating key themes and strategic priorities. With a focus on bolstering risk management in financial market infrastructures (FMIs), enhancing cross-border payments, and fostering digital innovation in payments, clearing, and settlement, the CPMI aims to navigate evolving technology landscapes while ensuring the safety and efficiency of global financial systems. Priorities include addressing non-default losses, margining practices, foreign exchange settlement risk reduction, cyber resilience, interlinking fast payment systems, tokenisation, central bank digital currencies, and stablecoin arrangements. This initiative underscores the CPMI’s commitment to adapting to industry shifts and advancing public policy needs in the ever-changing financial ecosystem. | ||
Guernsey | ODPA | The Data Protection Authority of Guernsey has released updated guidance for organizations on collecting personal data in accordance with the Data Protection (Bailiwick of Guernsey) Law, 2017. This essential guidance aims to ensure that all personal data is gathered and processed fairly and responsibly, emphasizing adherence to legal obligations, including maintaining an annual registration. It addresses the critical aspects of data collection, from determining who the data is collected from and the purposes of collection to how it should be securely stored and when it can be disposed of. By integrating these practices, organizations can significantly enhance their compliance throughout the data lifecycle, aligning with the foundational principles set out in the law. This update is crucial for all entities handling personal data, ensuring they remain compliant in a landscape of evolving data protection regulations. | ||
Ireland | GOV.IE | Public Consultation: Implementing EU Harmonised Rules on Artificial Intelligence (AI Act) in Ireland | The Department of Enterprise, Trade and Employment invites submissions to a public consultation concerning the implementation of the EU Artificial Intelligence (AI) Act, slated for entry into force in June 2024. This consultation aims to shape Ireland’s approach to implementing the Act, focusing particularly on configuring national competent authorities. The Act, with provisions rolling out over 36 months, seeks to establish a uniform legal framework for AI systems’ development, market entry, and usage, aligning with Union values to ensure human-centric and trustworthy AI adoption while safeguarding health, safety, and fundamental rights. Emphasizing a risk-based approach, the Act imposes obligations on providers, deployers, and distributors of high-risk AI systems, with pre-market certification and post-deployment surveillance. Special measures apply to General Purpose AI models, with a phased application timeline following the Act’s entry into force. Submissions, addressing specific questions outlined, are welcomed until July 16, 2024. | |
Isle of Man | GOV.IM | Update on GDPR and LED Implementing (Amendment) Regulations 2024 | The GDPR and LED Implementing (Amendment) Regulations 2024, recently approved by Tynwald, are set to come into operation on May 24, 2024. These regulations introduce significant changes aimed at enhancing the Data Protection Act 2018. The amendments provide stricter guidelines on the right of access, rectification, erasure of personal data, and the restriction of processing, aligning with the measures to safeguard public security, national security, and the rights and freedoms of others. This update reflects a progressive step towards balancing individual data protection rights with the essential needs of law enforcement and public security, ensuring that data handling remains both compliant and considerate of broader societal safety concerns. | |
Japan | JFSA | The Financial Services Agency (FSA) announced a draft partial revision to the “Comprehensive Guidelines for Supervision of Major Banks, etc.” This revision aims to clarify the financial measures that institutions must take when a disaster occurs or is imminent. The proposed amendments, detailed in Appendices 1 through 8, encompass guidelines for major banks, regional financial institutions, insurance companies, specified insurance companies, financial instruments business operators, electronic monetary claims recording institutions, system financial institutions, and fisheries cooperative system credit businesses. Stakeholders are invited to submit their opinions on the proposed changes by mail or online by June 24, 2024, with the understanding that names and comments may be disclosed upon request. The revisions are part of an ongoing effort to ensure financial stability and clear procedural guidance in times of crisis. | ||
Malta | MFSA | Consultation on Revised Chapter 3 of Financial Institutions Rulebook | The Malta Financial Services Authority (MFSA) has issued a consultation on the revised Chapter 3 of the Financial Institutions Rulebook (FIR/03), applicable to institutions issuing electronic money or providing payment services under the Financial Institutions Act. The new FIR/03 aligns with the Electronic Money Directive and Payment Services Directive and includes comprehensive rules on notification, prior approval, passporting, management, outsourcing, safeguarding, prudential requirements, and record-keeping. A quarterly ‘Financial Institutions Return’ will also be introduced. The consultation, open until June 21, 2024, aims to refine the regulatory framework, with a proposed 3-month transition period for compliance. | |
Netherlands | AFM | The Dutch Ministry of Finance has opened a consultation on the implementation decree for the Digital Operational Resilience Act (DORA), aiming to enhance the digital operational resilience of the financial sector. Running from May 21 to July 1, 2024, the consultation addresses the distribution of supervisory tasks and enforcement between the Autoriteit Financiële Markten (AFM) and De Nederlandsche Bank (DNB), formally designating these authorities. It aligns existing ICT and cyber resilience regulations for financial institutions with DORA requirements. Stakeholders are invited to contribute their knowledge and insights via the government’s Internet Consultation website by July 1, 2024. Following the consultation, the decree will be adjusted based on feedback, with a feedback statement published to outline the use of received comments. | ||
UAE | ADGM | The Financial Services Regulatory Authority (FSRA) and the Registration Authority (RA) of Abu Dhabi Global Market (ADGM) have jointly released Discussion Paper No. 1 of 2024, inviting feedback on proposals to enhance ADGM’s sustainable finance regulatory framework. This paper, issued on May 20, 2024, is divided into two parts. The first part seeks comments on new guidance for ESG-labelled investment vehicles, while the second part requests feedback on integrating climate-related risks into risk management and governance processes, and on transition planning for ADGM-licensed entities. ADGM has prioritized sustainable finance through recent initiatives like enhanced ESG disclosure requirements, the inclusion of Environmental Instruments, and the establishment of rules for green financial products. Stakeholders, including fund managers, asset managers, and companies under the Companies Regulations 2020, are encouraged to provide written comments by July 19, 2024. | ||
United Kingdom | GOV.UK | Enhancements to the National Networks National Policy Statement | The latest update to the National Networks National Policy Statement (NNNPS) features a comprehensive Appraisal of Sustainability (AoS), which underscores the government’s commitment to integrating sustainability into the UK’s significant infrastructure projects. The revised NNNPS, aligned with the UK’s net zero targets and the Transport Decarbonisation Plan, sets forth a framework for future developments within national road and rail networks, ensuring that they contribute positively to environmental sustainability while supporting economic growth. The AoS plays a crucial role in this process by evaluating potential social, economic, and environmental impacts and proposing measures to mitigate negative effects. This strategic approach not only facilitates sustainable development but also helps refine the NNNPS to reflect contemporary sustainability goals and practices. | |
United Kingdom | GOV.UK | Updated Guidelines on the Confidentiality of Suspicious Activity Reports | The recent update to Circular 022/2015 underlines the imperative of maintaining the confidentiality of Suspicious Activity Reports (SARs) and safeguarding the identities of the individuals who file them. Under the updated circular, the National Crime Agency (NCA), along with other law enforcement agencies, must adhere to stringent procedures to assess the relevance and sensitivity of each SAR, ensuring that disclosure does not compromise the effectiveness of money laundering investigations or endanger the individuals involved. The procedures include potential Public Interest Immunity (PII) applications and controlled disclosures, emphasizing the balance between legal transparency and protective confidentiality in combating financial crimes. | |
United Kingdom | GOV.UK | Consultation on the Environment Agency’s Enforcement and Sanctions Policy | The Environment Agency has launched a consultation on proposed updates to its Enforcement and Sanctions Policy (ESP) to incorporate the UK Emissions Trading Scheme (UK ETS) and the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). These updates are necessary to align the ESP with current climate change regulations, reflecting the UK’s departure from the EU Emissions Trading System and the implementation of CORSIA. The proposed changes include revising Annex 2 of the ESP to encompass these schemes and introducing new sections specific to UK ETS and CORSIA. Stakeholders, including operators, trade associations, and regulators, are invited to review and provide feedback on these revisions to ensure clarity and fairness in penalty settings. The consultation emphasizes the need for criteria that equitably apply to all regulated entities, especially concerning CO2 emissions. The Environment Agency aims to finalize the updates after considering the consultation responses, ensuring that the enforcement framework supports sustainable development and effective climate change mitigation. | |
United Kingdom | UK Finance | The HM Revenue & Customs (HMRC) has launched a consultation aimed at raising standards in the tax advice market by enhancing the regulatory framework and improving registration processes. UK Finance, representing 300 firms within the banking and finance industry, supports the consultation’s objectives and welcomes the focus on advisors who directly interact with HMRC. UK Finance agrees with the exclusion of members of regulated professions from the new regulations and suggests extending this exclusion to regulated financial institutions. This approach would prevent unnecessary administrative burdens on institutions already adhering to the FCA’s consumer protection standards and the Code of Practice on Taxation for Banks. UK Finance also recommends distinguishing between actual tax advice and tax-related information provided by financial institutions, ensuring that routine information reporting and compliance activities remain outside the scope of the new regulations. This consultation represents a significant step towards enhancing the integrity and quality of the tax advice sector in the UK. | ||
Banks and Insurers | Chile | CMF | The Financial Market Commission, under the guidance of Chairwoman Solange Berstein, introduced pivotal regulations to address previous gaps in the corporate governance and risk management framework within the securities markets. Prior to this, the banking and insurance sectors had comprehensive regulations covering these areas, unlike the securities sector which, despite following international standards, lacked formal regulation. The new rules, specifically General Rules No. 507, 508, 509, and 510, aim to standardize and elevate risk management practices across various financial sectors. These regulations mandate continuous improvement processes for risk management, clarify the roles and responsibilities of board members in strategic and integral risk management, and introduce specific requirements for Internal Audit functions and Anti-Money Laundering measures. This regulatory enhancement ensures a more robust and unified approach to managing operational risks, including cyber security and incident reporting, across fund managers, financial market infrastructures (FMIs), and exchanges, aligning closely with recent fintech regulations. | |
Banking | European Union | EBA | On May 24, 2024, the European Banking Authority (EBA) released a report highlighting the inconsistent issuance and regulation of virtual IBANs (vIBANs) across the European Union. The report notes significant divergences in how vIBANs are issued and the varying interpretations of regulatory requirements by national authorities. These discrepancies raise concerns regarding money laundering, terrorist financing, consumer protection, and regulatory arbitrage. The EBA points out the lack of a common definition and varying national interpretations of EU financial laws, such as the Anti Money Laundering Directive and the Payment Services Directive, which complicate the effective supervision and risk management of vIBANs. To address these issues, the EBA recommends clarifying EU law and suggests specific actions for national competent authorities to enhance oversight and consistency in the issuance and regulation of vIBANs. This initiative aims to bolster the integrity and uniformity of the EU financial system, mitigating risks associated with vIBANs and ensuring robust consumer protection. | |
European Union | European Union | The European Parliament and the Council adopted significant amendments to Regulation (EU) No 575/2013, aimed at enhancing the resilience of the EU banking sector. These adjustments focus on requirements for credit risk, credit valuation adjustment risk, operational risk, market risk, and the implementation of the output floor. This reform, a response to the global financial crisis and subsequent economic challenges, aligns the EU with international standards established by the Basel Committee on Banking Supervision. Key changes include the introduction of an aggregate output floor to reduce risk-weight variability among banks using internal models, adjustments to credit risk measurements to increase risk sensitivity, and specific provisions for market risk that ensure fair competition within the EU and on a global scale. This regulation underscores the EU’s commitment to a robust banking framework that supports financial stability while considering the specificities of the EU market. | ||
Insurance | India | IRDAI | The Insurance Regulatory and Development Authority of India (IRDAI) has released a Master Circular on Corporate Governance for Insurers, 2024. This follows the notification of the “Insurance Regulatory and Development Authority of India (Corporate Governance for Insurers) Regulations, 2024” on March 21, 2024. The Circular provides detailed operational and procedural guidelines to ensure robust governance practices among insurers. Applicable to all insurers except foreign companies engaged in re-insurance via branches in India, the Circular comes into effect immediately. Insurers are expected to comply with its provisions by June 30, 2024. This initiative aims to enhance the governance framework within the insurance sector, aligning with Sections 34 of the Insurance Act, 1938, and Section 14 of the IRDA Act, 1999. | |
United Kingdom | BOE | The Prudential Regulation Authority (PRA) has released a policy statement on May 22, 2024, detailing updates and feedback related to the authorisation and supervision of third-country insurance branches. The statement introduces a new Statement of Policy (SoP) to replace SS2/18, and two updated versions of SS44/15 to align with Solvency II regulations, effective in May and December 2024. Key updates include clarifications on supervisory expectations, amendments based on consultation responses, and adjustments to enhance regulatory transparency and coherence with the PRA’s broader objectives. These changes aim to facilitate a level playing field for international insurers in the UK while maintaining rigorous standards for safety, soundness, and policyholder protection. | ||
Investment | Canada | BCSC | The Canadian Securities Administrators (CSA) have announced the adoption of amendments to National Instrument 81-102 Investment Funds (NI 81-102) and changes to Companion Policy 81-102CP, with an effective date of August 31, 2024, subject to regulatory and ministerial approvals. These amendments aim to accommodate a range of settlement cycles for mutual funds, particularly those opting to shorten their settlement cycle from T+2 to T+1. Key changes include clarifications on payment deadlines for purchase orders and requirements for mutual funds choosing to expedite settlement cycles. The amendments also provide guidance on disclosing reference settlement dates. Following a comment period, during which two supportive comments were received, adjustments were made to align with stakeholders’ feedback. | |
European Union | ESMA | Consultation on MiFIR: Consolidated Tape Providers and Data Reporting Service Providers | The European Securities and Markets Authority (ESMA) has initiated a consultation aimed at refining the Markets in Financial Instruments Regulation (MiFIR). This review, stemming from a mandate by the European Commission, focuses on establishing consolidated tape providers (CTPs) and enhancing data reporting service providers (DRSPs). Key aspects of the consultation include developing new technical standards for CTP input and output data requirements, revising revenue distribution schemes, and aligning business clock synchronization. Furthermore, ESMA is reevaluating the authorization and organizational requirements for DRSPs. This consultation is integral for stakeholders across trading venues and investment firms, including systematic internalises, who will be directly affected by these proposed changes. This initiative aligns with broader efforts to increase market data transparency and remove barriers hindering the emergence of a consolidated tape in the EU, supporting the Capital Markets Union action plan. | |
European Union | ESMA | ESMA Proposes Enhanced Technical Standards for Commodity Derivatives | The European Securities and Markets Authority (ESMA) has proposed significant amendments to the MiFID II technical standards, focusing on the position management and reporting for commodity derivatives. As outlined in their recent consultation paper, these changes aim to adapt the regulatory framework to the evolving market dynamics and ensure alignment with the Directive amendments under MiFID II, specifically addressing commodities and emission allowances. Key proposals include extending position management controls to include trading venues that deal with emission allowances derivatives, refining position reporting requirements to enhance market transparency, and updating the Implementing Technical Standards (ITS 4) to streamline reporting processes. These adjustments are designed to bolster market oversight and facilitate more effective monitoring by integrating contemporary practices like the issuance of two weekly position reports—one excluding options. The consultation period invites industry feedback to refine these proposals, ensuring they meet practical needs while upholding regulatory objectives. | |
European Union | European Commission | Enhancing Macroprudential Oversight for Non-Bank Financial Intermediaries | The European Commission has launched a targeted consultation to evaluate the adequacy of macroprudential policies for non-bank financial intermediation (NBFI). As the landscape of financial intermediation broadens beyond traditional banking, the significance of NBFIs in the EU financial system has markedly increased, representing about 41% of EU total financial assets as of Q3 2023. This consultation is driven by recent financial stability concerns highlighted by incidents such as the March 2020 liquidity crisis and seeks to align and possibly expand the existing macroprudential framework to effectively oversee the diverse NBFI sectors, including asset management, insurance, and pension funds among others. The aim is to adapt regulatory measures to mitigate systemic risks posed by NBFIs, ensuring a stable financial environment conducive to supporting the broader economy. The feedback gathered will guide the policy planning for the 2024-2029 period, reflecting on both the effectiveness of current tools and the necessity for new mechanisms to ensure robust financial oversight. | |
Ireland | CBI | On May 20, 2024, the Central Bank of Ireland hosted an international conference focused on macroprudential policy for investment funds. The event aimed to gather diverse perspectives from central banks, securities regulators, industry representatives, and academics to enhance the resilience of the investment funds sector. Governor Gabriel Makhlouf emphasized the need for a balanced regulatory approach that integrates both investor protection and financial stability. Keynote speeches were delivered by Verena Ross, Chair of ESMA, and Klaas Knot, President of De Nederlandsche Bank and Chair of the FSB. Deputy Governor Vasileios Madouros highlighted the importance of sustainable and resilient capital markets, calling for international coordination to address global risks. A Feedback Statement summarizing the conference discussions and responses to the July 2023 Discussion Paper will be published later this summer. | ||
United States | NFA | The National Futures Association (NFA) has proposed significant amendments to Part 3 of its Compliance Rules, aimed at enhancing the disciplinary processes for its members. Submitted to the Commodity Futures Trading Commission (CFTC) for approval, these changes are designed to improve the clarity and efficiency of NFA’s compliance and enforcement mechanisms. The amendments include updates to pre-hearing procedures, service requirements, and the publication of complaints and decisions on NFA’s BASIC system. Additionally, the revisions seek to streamline the appointment of Hearing Panels and the consideration of settlement offers, aligning them more closely with current practices. These proposed updates underscore NFA’s commitment to maintaining robust regulatory oversight and ensuring fair and transparent processes for addressing compliance issues within the futures and derivatives markets. | ||
United States | NFA | The National Futures Association (NFA) has proposed amendments to the Interpretive Notices 9031 and 9032, which govern the standard list of documents to be exchanged in arbitration under the NFA’s Code of Arbitration and Member Arbitration Rules, respectively. These updates are designed to reflect the current practices and technological advancements in communication and trading, ensuring that all relevant electronic communications and trading records are routinely considered during the discovery process. The proposal aims to streamline the arbitration process by mandating the exchange of essential documents early on, thus promoting fairness and efficiency in resolving disputes. These amendments are set to enhance transparency and adaptability within NFA’s arbitration framework, catering to the evolving needs of the futures and derivatives markets. | ||
United States | NYSE | The NYSE Chicago has announced proposed rule changes aimed at enhancing the supervision of its members by adopting standards based on NYSE American Rules 3110 and 3120 for Equities. These modifications are intended to update and standardize supervisory and supervisory control systems, aligning more closely with industry practices and improving the regulatory framework. The proposed changes focus on detailed supervisory responsibilities, including comprehensive guidelines on internal inspections, review of transactions, and communication compliance, which are critical for maintaining market integrity and protecting investors. These amendments reflect NYSE Chicago’s commitment to ensuring its regulatory environment keeps pace with evolving market dynamics and aligns with best practices across similar platforms. | ||
United States | Federal Register | Customer Identification Programs for Registered Investment Advisers and Exempt Reporting Advisers | The Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury, in collaboration with the Securities and Exchange Commission (SEC), has issued a joint notice of proposed rulemaking. This proposal is part of implementing the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act). The rulemaking targets specific investment advisers, potentially classifying them as “financial institutions” under the Bank Secrecy Act. This classification would mandate these advisers to develop and implement procedures to verify the identities of their customers effectively. This move aims to enhance regulatory frameworks to prevent financial crimes such as money laundering and terrorism financing. Public comments on this proposal are invited until July 22, 2024, and can be submitted via the Federal E-Rulemaking Portal or directly to the SEC through various channels. This rule underscores a significant step toward tightening financial security measures and ensuring robust compliance in the investment advisory sector. |
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