For week 24, the regulatory updates highlight significant changes across various jurisdictions aimed at enhancing operational resilience, transparency, and investor protection. These updates underscore a global commitment to fortifying financial systems and adapting to evolving market dynamics.
Business Line | Country | Regulator | Regulatory Update | Summary |
All | Australia | APRA | Updated Prudential Practice Guide for Operational Risk Management | The Australian Prudential Regulation Authority (APRA) released an updated Prudential Practice Guide CPG 230, focused on Operational Risk Management. This guide provides APRA-regulated entities with comprehensive guidance to ensure compliance with Prudential Standard CPS 230, which was finalized in July last year and will take effect from 1 July 2025. Key elements include the necessity for entities to effectively manage operational risks, maintain critical operations within defined tolerance levels during disruptions, and manage risks associated with service providers. Entities are required to develop robust governance frameworks, perform regular risk assessments, maintain effective internal controls, and ensure business continuity through well-documented plans and regular testing. Furthermore, the guide emphasizes the importance of integrating operational risk management within the broader risk management framework, maintaining a detailed register of critical operations, and ensuring continuous compliance through periodic reviews and updates. This update underscores APRA’s commitment to enhancing the resilience and stability of financial institutions amidst evolving operational challenges. |
Canada | BOC | The Canadian Alternative Reference Rate working group (CARR) issued guidance for market participants dealing with CDOR-based loans, derivatives, and securities that lack robust fallback language ahead of CDOR’s cessation on June 28, 2024. This guidance aims to establish best practices for transitioning to alternative rates, particularly Daily Compounded CORRA or Term CORRA for loans, Fallback Rate (CORRA) for derivatives, and similar adjustments for cash securities. CARR emphasizes the importance of amending contracts and ensuring compliance with previously recommended fallbacks by both CARR and the International Swaps and Derivatives Association (ISDA). Issuers of CDOR-linked securities are advised to communicate changes through CDS Clearing and Depository Services Inc. to ensure transparency. The guidance underscores the necessity for market participants to seek independent legal advice and adhere to regulatory expectations, as highlighted by the Office of the Superintendent of Financial Institutions and the Canadian Securities Administrators. | ||
European Union | European Union | The European Union finalized the Artificial Intelligence Act (AI Act), a landmark regulation designed to harmonize rules governing the development, marketing, and use of AI systems across member states. This comprehensive framework aims to foster innovation while ensuring a high level of protection for public interests such as health, safety, and fundamental rights. The AI Act mandates conformity assessments for high-risk AI systems, enforces transparency, and promotes the development of trustworthy AI aligned with Union values. Additionally, the regulation introduces specific amendments to existing EU legislation to integrate AI-specific requirements, thereby facilitating a uniform approach to AI regulation across various sectors. | ||
European Union | European Union | The European Parliament and Council have enacted a new directive on corporate sustainability due diligence, effective from June 13, 2024. This directive mandates companies operating within the EU to integrate risk-based human rights and environmental due diligence into their policies and risk management systems. The directive aims to ensure that companies identify, prevent, mitigate, and remediate adverse impacts on human rights and the environment within their operations, subsidiaries, and value chains. Companies are also required to engage stakeholders meaningfully and maintain a complaints procedure to address potential risks and impacts. The directive emphasizes transparency by requiring companies to publicly communicate their due diligence processes and outcomes. This legislative move aligns with the EU’s broader goals of promoting sustainable economic development, combating climate change, and ensuring respect for human rights globally. | ||
European Union | EBA | The European Banking Authority (EBA) released a comprehensive package of technical standards and guidelines under the Markets in Crypto-Assets Regulation (MiCAR) addressing prudential matters, including own funds, liquidity requirements, and recovery plans. This initiative is part of the EBA’s effort to create a robust regulatory framework for asset-referenced tokens (ARTs) and e-money tokens (EMTs) within the EU. The package includes final draft regulatory technical standards (RTS) detailing the adjustment of own funds requirements, stress-testing programmes, and liquidity management policies for issuers of ARTs and EMTs. It also specifies procedures for liquidity risk management and the criteria for highly liquid financial instruments. Furthermore, the guidelines outline the format and content required for recovery plans. These regulatory products have been developed in collaboration with the European Securities and Markets Authority (ESMA) and the European Central Bank (ECB), ensuring a harmonized approach to managing the risks associated with crypto assets. | ||
European Union | European Council | The Council of the European Union has reached a consensus on a new regulation aimed at enhancing cooperation among national data protection authorities (DPAs) for enforcing the General Data Protection Regulation (GDPR). This agreement, announced by Paul Van Tigchelt, Minister of Justice, underscores the EU’s commitment to strengthening the enforcement of data protection laws, particularly in cases of cross-border data processing. The new regulation seeks to streamline the handling of cross-border complaints and investigations by harmonizing the requirements for admissibility and clarifying procedural deadlines and steps. It emphasizes early consensus through enhanced cooperation tools and ensures the rights of both complainants and the investigated parties are upheld throughout the process. The Council’s position introduces specific timelines to expedite the cooperation process, allows for flexible application of additional rules in simpler cases, and incorporates an early resolution mechanism to address complaints efficiently. This agreement paves the way for negotiations with the European Parliament to finalize the legislative text. | ||
France | CNIL | The French data protection authority, CNIL, announced a new public consultation focused on the development of artificial intelligence (AI) systems, set to run until September 1, 2024. This initiative includes a series of practical fact sheets and a detailed questionnaire aimed at helping professionals balance innovation with privacy rights under the General Data Protection Regulation (GDPR). This follows CNIL’s initial recommendations from April 2024, which addressed principles such as purpose limitation, data minimization, and retention periods. The new consultation covers topics including legal bases for legitimate interest, open-source model dissemination, web scraping, informing data subjects, data annotation, and ensuring AI system security. CNIL seeks insights from AI system suppliers, users, and stakeholders to tailor future guidelines to real-world risks and industry capabilities. The feedback will contribute to the final recommendations, expected to be published later in 2024, further supporting the ethical development of AI in line with European values. | ||
Malta | MFSA | Consultation on Revised Financial Institutions’ Prudential Requirements | Malta Financial Services Authority (MFSA) has released a consultation document proposing revisions to the Financial Institutions (FI) Return, aligning it with the Financial Institutions Act and the Financial Institutions Rulebook. This revised FI Return aims to streamline data collection and dissemination for financial institutions licensed under the Act, encompassing a comprehensive range of activities including payment services and electronic money issuance. The unified regulatory return is designed to enhance supervision by incorporating detailed sheets covering various aspects of financial operations such as client data, conduct, products, services, operations, own funds calculation, regulatory requirements, and safeguarding measures. The consultation period will end on July 12, 2024, and the MFSA encourages all licensees and stakeholders to submit their feedback. The new FI Return will be prepared quarterly, annually, and as an audited annual report, featuring multi-currency reporting and automated data validation for consistency and accuracy. | |
Nigeria | FRC | Financial Reporting Council of Nigeria (FRC) has released comprehensive Corporate Governance Guidelines for Small and Medium-sized Enterprises (SMEs). These guidelines aim to enhance the governance framework for SMEs, which constitute 96% of businesses and 84% of employment in Nigeria. The guidelines, derived from the Nigerian Code of Corporate Governance (NCCG) 2018, cover key areas such as board of directors, internal controls, stakeholder relations, and environmental, social, and governance (ESG) considerations. Designed to improve transparency, accountability, and sustainability, the guidelines offer practical steps for SMEs to implement robust governance structures, thereby boosting their bankability and investment appeal. The guidelines also address the unique challenges of family-run businesses, emphasizing the importance of succession planning and effective communication. By adopting these principles, Nigerian SMEs can better navigate market competition and regulatory pressures, ultimately contributing to national economic growth. | ||
United Kingdom | FCA | Financial Conduct Authority (FCA) and the Bank of England have jointly published draft questions and answers (Q&As) for consultation, focusing on the updated UK EMIR Article 9 reporting requirements. These requirements, applicable from September 30, 2024, aim to enhance the reporting framework for derivatives. The consultation seeks input from relevant stakeholders, including counterparties, trade repositories (TRs), and third-party service providers. The draft Q&As cover a range of topics, such as transitional arrangements, reconciliations, errors and omissions, and margin and collateral, providing clarity on implementation. Feedback from the consultation will inform the final Q&As, which will be published in summer 2024. This initiative is part of ongoing efforts to ensure consistent and accurate derivatives reporting in the UK market. | ||
Banking | European Union | European Commission | Public Consultation on OTC Derivatives Identifying Reference Data | The European Commission has launched a public consultation on a Draft Delegated Regulation specifying the identifying reference data for over the counter (OTC) derivatives necessary for public transparency. This initiative, open for feedback from June 12, 2024, to July 10, 2024, aims to define the data required for pre- and post-trade transparency reporting under the Markets in Financial Instruments Regulation (MiFIR). The draft regulation outlines the use of ISO 6166 International Securities Identifying Number (ISIN) and ISO 4914 Unique Product Identifier (UPI) for categorizing OTC interest rate swaps and credit default swaps. These measures are designed to enhance transparency, reduce complexity, and improve data aggregation across global markets. Stakeholders, including counterparties, trade repositories, and financial service providers, are encouraged to participate in the consultation to help shape the final regulation, expected to be adopted in the third quarter of 2024. |
Japan | JFSA | Discussion Paper on Climate Scenario Analysis for Financial Risk Management | On April 16, 2024, the Basel Committee on Banking Supervision released a discussion paper titled “The Role of Climate Scenario Analysis in Strengthening the Management and Supervision of Climate-Related Financial Risks.” This paper is part of the Committee’s ongoing efforts, initiated with the June 2022 principles on managing climate-related financial risks, to enhance the understanding and application of climate scenario analysis in financial institutions. The document seeks feedback from stakeholders on the roles and challenges of climate scenario analysis in risk management and supervision. Comments are invited until July 15, 2024. The Financial Services Agency of Japan and the Bank of Japan have provided explanatory materials to support the consultation process. | |
Insurance | Chile | CMF | Monthly Financial and Solvency Reporting Requirements for Insurance Companies | Comisión para el Mercado Financiero (CMF) has announced a proposed regulation mandating monthly financial and solvency reporting for insurance and reinsurance companies, aiming to enhance the supervisory and prudential analysis process. The regulation updates Circular No. 2275 by systematizing the existing solvency projection requirements and integrating them into the current monthly financial statements. Additionally, new accounts and detailed breakdowns in the financial analysis are introduced. These updates are designed to strengthen the oversight of insurers, ensuring their solvency and ability to meet policyholder commitments. Stakeholders can submit comments on the draft regulation until July 10, 2024, through the CMF’s consultation section on their website. |
India | IRDAI | Master Circular on General Insurance Products Regulations 2024 | Insurance Regulatory and Development Authority of India (IRDAI) has issued a Master Circular (Ref: IRDAI/NL/MSTCIR/MISC/90/06/2024) under Sections 14 and 34 of the IRDA Act, 1999, and the Insurance Act, 1938, respectively. This circular provides comprehensive guidance on the operational aspects of general insurance products following the IRDAI (Insurance Products) Regulations 2024. The circular emphasizes a shift from rule-based to principle-based regulations, encouraging innovation and simplifying insurance products to enhance customer experience. It mandates the submission of returns as specified and clarifies that all previous guidelines related to general insurance product filings are repealed, with ongoing actions under previous guidelines remaining valid. This new regulatory framework aims to foster best practices in product design and pricing, ensuring insurers offer both existing and new products without withdrawing or discouraging the use of traditional tariff products. The Master Circular is effective immediately and applies to all general insurance products and add-ons, excluding health insurance within package products. | |
Investment | Australia | Treasury | Treasury Laws Amendment: Public Consultation on Better Financial Outcomes Regulations | The Australian Government as initiated a public consultation on the draft Treasury Laws Amendment (Delivering Better Financial Outcomes) Regulations 2024. This consultation, open until July 8, 2024, supports the implementation of the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024. Key amendments include allowing electronic submission of required documents under the Superannuation Industry (Supervision) Act 1993, updating record-keeping for fee disclosures, aligning Financial Services Guides and Website Disclosure Information, and refining conflicted remuneration rules. The consultation aims to gather feedback to ensure the regulations effectively enhance financial advice quality. Interested parties are encouraged to submit their responses electronically to financialadvice@treasury.gov.au. Key documents and further details are available on the Treasury’s website. |
European Union | European Union | European Commission has presented a report to the European Parliament and the Council regarding the delegation of power to adopt delegated acts under Regulation (EU) 2016/1011. This regulation, which was initially adopted on June 8, 2016, establishes a common framework to ensure the accuracy and integrity of indices used as benchmarks in financial instruments and contracts. The report covers the period from December 10, 2019, to December 10, 2024, detailing the adoption of several delegated acts aimed at enhancing transparency and regulatory oversight of benchmarks. Notably, it discusses the need for continued empowerment to adopt delegated acts, given the ongoing adjustments and the postponement of the application dates for certain third-country benchmarks. The Commission recommends a tacit extension of the delegation of power for an additional five-year period to ensure continuous regulatory improvements and market stability. | ||
Luxembourg | CSSF | The Commission de Surveillance du Secteur Financier (CSSF) has published a comprehensive document addressing the macroprudential policy considerations for investment funds. The report highlights the significant growth of investment funds and the Non-Bank Financial Intermediation (NBFI) sector since the 2007/2008 financial crisis, noting the increase in total financial assets from USD 24.7 trillion in 2009 to USD 74.8 trillion in 2022 globally. The CSSF identifies key vulnerabilities such as liquidity mismatches, excessive leverage, and interconnectedness within the investment fund sector, particularly during market stresses like the COVID-19 pandemic and the UK gilt crisis. The document emphasizes the need for targeted regulatory measures, including the use of liquidity management tools (LMTs), enhanced data reporting, and system-wide stress testing to mitigate systemic risks. The CSSF supports the repurposing and adaptation of existing tools before considering new ones and advocates for improved supervisory cooperation at both national and international levels to ensure the resilience and stability of the investment fund sector. | ||
New Zealand | FMA | Consultation on Standard Conditions for Derivatives Issuer Licences | The Financial Markets Authority (FMA) of New Zealand has released a consultation paper proposing new standard conditions for derivatives issuer (DI) licences, aimed at bolstering investor protection. Key changes include imposing leverage limits across various asset classes and revising the suitability assessments for retail investors. The leverage limits, set to align with international standards, cap leverage at 30:1 for major currency pairs, 20:1 for gold and major stock indices, 10:1 for commodities, 5:1 for equities, and 2:1 for crypto assets. Additionally, the revised suitability condition mandates that DIs must ensure retail investors fully understand the risks associated with derivatives before entering contracts. The consultation period is open until August 7, 2024, and seeks feedback from industry stakeholders on these proposed measures. | |
Romania | ASF Romania | Financial Supervisory Authority (ASF) of Romania has approved a revised draft law to amend and supplement Law No. 24/2017 concerning issuers of financial instruments and market operations. This legislative initiative aims to strengthen Romania’s capital market by enhancing investor protection, facilitating access to capital for companies, and supporting the domestic economy. Key changes include simplifying capital-raising procedures, reducing the minimum period for exercising pre-emption rights from 30 to 14 calendar days, and expediting the publication of decisions related to securities issuances. The draft law also introduces provisions for executing court decisions on nullifying or annulling capital increases and extends the publication deadline for quarterly reports from 45 to 60 days. The revised law has been sent to the Ministry of Finance for further approval and parliamentary debate. | ||
Switzerland | FINMA | Swiss Financial Market Supervisory Authority (FINMA) has released a supervisory notice (04/2024) outlining the management of operational risks for fund managers and asset managers. This document emphasizes the critical importance of effective risk management to safeguard investors and ensure business continuity. Key areas addressed include information technology and data security risks, cyber risks, business continuity planning, and compliance risks, especially in cross-border activities. The guidelines provide detailed examples of recent deficiencies observed in these areas and prescribe best practices for mitigating such risks. Additionally, the notice highlights the necessity of periodic reviews and updates to risk management protocols, and the importance of clear responsibilities and communication strategies in crisis situations. Fund managers are reminded of their obligation to report cyber-attacks and data breaches to the relevant authorities. This initiative is part of FINMA’s ongoing efforts to strengthen the operational resilience of financial institutions under its supervision. | ||
United States | SEC | The Securities and Exchange Commission (SEC) has adopted new rules aimed at enhancing investor protections in initial public offerings (IPOs) by special purpose acquisition companies (SPACs) and subsequent business combination transactions, known as de-SPAC transactions. These rules introduce comprehensive disclosure requirements concerning sponsor compensation, conflicts of interest, dilution, and the advisability of de-SPAC transactions as determined by a SPAC’s board. Additionally, the SEC mandates a minimum dissemination period for shareholder communication materials and re-determination of smaller reporting company (SRC) status during de-SPAC transactions. The new rules also clarify the scope of the safe harbour for forward-looking statements and deem any business combination involving a reporting shell company to be a sale of securities. Amendments to financial statement requirements for shell companies and updates on the use of projections in Commission filings are also included. Guidance is provided for SPACs to evaluate their status under the Investment Company Act of 1940, ensuring comprehensive regulatory compliance. |
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