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In this regular update, we round-up FinTech-related regulatory developments for the week ending 20 November 2020.


FATF Speech: Implementation of virtual asset standards

The Financial Action Task Force (FATF) has published the opening remarks delivered by Executive Secretary David Lewis at the V20 Summit. The focus of Mr Lewis' address was on the implementation of the FATF standards for virtual assets. Although noting good progress by both the public and private sectors, Mr Lewis commented that the so-called 'travel rule' has yet to be implemented globally or effectively.

In his comments on the misuse of virtual assets for illicit purposes, Mr Lewis highlighted that the FATF had identified the increased use of virtual assets to move and conceal illicit funds in response to Covid-19.

A second review of implementation of the virtual asset standards will be published in June 2021. [16 Nov 2020]






HMT, BoE and FCA launch new working group to facilitate investment in productive finance

HM Treasury (HMT), the Bank of England (BoE) and the FCA have announced that they will convene a working group to facilitate investment in productive finance. Investment in productive finance refers to investment that expands productive capacity, furthers sustainable growth and can make an important contribution to the real economy. Examples of this include plant and equipment (which can help businesses achieve scale), research and development (which improves the knowledge economy), technologies (for example, green technology), infrastructure and unlisted equities related to these sectors.

The working group will build upon work already undertaken to investigate the challenges and potential barriers to investment in productive finance assets in the UK, including the HMT’s Patient Capital Review (2016) and the Asset Management Taskforce’s UK Funds Regime Working Group’s Long-Term Asset Fund (LTAF) proposal (2019).

It will propose solutions for barriers to investments to be implemented by industry participants, and will also set out a roadmap, timetable and set of actions to implement those solutions. [20 Nov 2020]





EU Exit: TSC launches new inquiry into the future of financial services

The Treasury Committee (TSC) has launched a new inquiry in the Future of Financial Services.  The inquiry will examine how financial services regulations should be set and scrutinised by Parliament; how regulators are funded; how Government policy and UK regulators could facilitate the growth of FinTech and new competition; and the extent to which financial services regulation should be consumer-focused.

call for evidence has been published which sets out a number of questions; evidence submissions are requested by 8 January 2021. [20 Nov 2020]





International Trade Committee report on UK-Japan trade deal

The UK Parliament's International Trade Committee has published report on the UK-Japan Comprehensive Economic Partnership Agreement (CEPA). In terms of financial services-related content, the report states that the Committee heard in evidence that there are three ways in which CEPA differs from the EU-Japan trade agreement, namely:

  • the terms under which UK suppliers can offer new financial services on the same basis as Japanese suppliers are such that they apply to all modes of supply;
  • CEPA includes a ban on requiring services providers to store financial data in the host country; and
  • CEPA contains provisions regarding regulatory cooperation on financial services, which provide for the creation of a Joint UK-Japan Financial Regulatory Forum. [19 Nov 2020]



FCA Regulation Round-up: November 2020

The FCA has issued the November 2020 edition of its Regulation Round-up, which includes information relating to the digital sandbox pilot, the Global Financial Innovation Network (GFIN) cross-border testing of financial products and services, and the FCA's new data collection platform. [19 Nov 2020]




HMT: Speech on the future of financial services

HMT has published a the keynote speech delivered by John Glen, Economic Secretary, to TheCityUK 2020 conference. Mr Glen set out the government's goal to ensure that the UK financial services sector becomes 'the most open and competitive financial services centre in the world'. He discussed both technology and green finance, before turning to the wider programme of regulatory reform. [19 Nov 2020]

FCA CP20/22: Proposed changes to raising FCA fees

The FCA has published a consultation paper (CP20/22) which sets out proposed policy changes to the way that the FCA raises its fees from 2021/22, including the structure of periodic fees for cryptoasset businesses (see Chapter 3).

Feedback is requested by 22 January 2021, and the FCA expects to publish its feedback and rules in a Handbook Notice during March 2021. [19 Nov 2020]

FCA warns firms to be responsible when handling client data

The FCA has published a statement warning firms to make sure they lawfully process and transfer client data. The FCA sets out the requirements under the FCA Handbook PrinciplesData Protection Act (DPA), General Data Protection Regulation (GDPR) and the Privacy and Electronic Communications Regulations (PECR), to which firms should have regard. [18 Nov 2020]

Covid-19: BoE speech on digital finance

The Bank of England (BoE) has published a speech, delivered by its Chief Economist and Member of the Monetary Policy Committee (MPC), Andy Haldane, at the CityUK 10th Anniversary Conference. Amongst other things, Mr Haldane spoke about how developments in digital finance could transform both consumer and business payments, and support businesses in raising finance. He opined that digital finance developments could help revitalise the UK economy. [18 Nov 2020]



EU Exit: SI on payment services and electronic money published

The Payment Services and Electronic (Amendment) (EU Exit) Regulations 2020 (SI 2020/1275) (and accompanying explanatory memorandum) have been published. These Regulations amend the Electronic Money Regulations 2011 and the Payment Services Regulations 2017 in order to apply sections 93(4) and 233-236 of the Banking Act 2009, with modifications, to authorised electronic money institutions, small electronic money institutions, authorised payment institutions and small payment institutions, and allow HMT to make regulations to modify insolvency law with respect to these institutions. [16 Nov 2020]



FSCS: Crowdfunding risks

The Financial Services Compensation Scheme (FSCS) has issued a press release which explains the risks of investing by crowdfunding. [16 Nov 2020]



ECB speech on sustainable growth

The ECB has published a keynote speech delivered by President Christine Lagarde, in which she outlined a vision for a future economy that harnesses the possibilities that new technologies offer. To meet this goal, Ms Lagarde expanded on two priorities, namely innovation and education. [20 Nov 2020]

ECB: Working paper on open-economy implications of CBDC

The European Central Bank (ECB) has published a working paper on the open-economy implications of a central bank digital currency (CBDC). In order to examine these implications, the paper extends the two-country DSGE (dynamic stochastic general equilibrium) model by adding a CBDC instrument to the menu of monetary assets available. [19 Nov 2020]

New Nordic payment schemes

The EPC has issued a press release highlighting that the Nordic Payments Council (NPC) has developed the first Nordic payment schemes, based on and close to the European Payments Council’s (EPC's) Single Euro Payments Area (SEPA) payment schemes.

The NPC has developed, performed public consultation on and published the first NPC Schemes - NPC Credit Transfer and NPC Instant Credit Transfer Schemes. These will go into effect at the end of 2020 and the beginning of 2021 respectively. Co-operation between the EPC and the NPC has meant that the NPC Schemes are very close to the EPC Schemes. This will ultimately contribute to the goal of harmonising payments not only in the Nordics but across Europe. [19 Nov 2020]


Hong Kong

HKEX seeks views on proposal to modernise IPO settlement process

The HKEX has published a concept paper to seek market feedback on its proposal to comprehensively modernise and digitalise Hong Kong’s IPO settlement process. Under the proposal, the HKEX will introduce a new web-based service called Fast Interface for New Issuance (FINI) that enables IPO market participants, advisers and regulators to interact digitally on the various steps that comprise the end-to-end IPO settlement process.  The deadline for responding to the concept paper (via the feedback form) is 6pm on 15 January 2021.

HKEX expects that the introduction of FINI will shorten the time gap between IPO pricing and trading from its current average of more than five business days to as little as one business day.

FINI is intended to provide a single user-friendly platform that brokers, share registrars, IPO sponsors, lawyers, underwriters and distributors can use to share information and coordinate workflows during the offering initiation, subscription, pricing, allotment, payment, regulatory approval and stock admission processes.  The HKEX’s Listing Division, Hong Kong Securities Clearing Company (HKSCC) and the SFC will use FINI to oversee the settlement process for each IPO, providing the required acknowledgements and approvals directly via the new platform.

The launch date of FINI will be subject to market support and readiness, and is envisaged to take place no earlier than the second quarter of 2022.

The HKEX has also issued a circular regarding the concept paper.  To prepare for FINI, CCASS participants and designated banks are requested to nominate two project coordinators (a primary and a secondary contact), and to provide their contact details to the HKSCC (via email to [email protected]) by 30 November 2020.  The HKSCC will reach out to the project coordinators to provide updates on FINI on a regular basis.  [16 Nov 2020]






SFC signs fintech cooperation agreement with ISA 

The SFC has entered into a cooperation agreement with the Israel Securities Authority (ISA) to establish a framework for cooperation on financial technology (fintech).

Under the agreement, the SFC and the ISA will cooperate on:

  • information sharing (relating to, among others, emerging trends and developments, regulatory issues pertaining to innovation in financial services, and information on organisations or bodies which lead efforts to promote innovation in financial services);
  • potential joint innovation projects on the application of novel financial technologies;
  • referrals of innovative firms seeking to enter one another’s markets.

The agreement follows the launch of the SFC’s Fintech Contact Point in March 2016 and the ISA’s Fintech Innovation Hub in July 2018.  [17 Nov 2020]




MAS and Bangko Sentral ng Pilipinas: Joint Statement of Intent on Data Connectivity

Bangko Sentral ng Pilipinas (BSP) and MAS have agreed on and jointly issued a statement of intent on data connectivity. In the statement, BSP and MAS explain that they recognise that the ability to aggregate, store, process, and transmit data across borders is critical to the development of the financial sector. The expanding use of data in financial services and the increasing use of technology to supply financial services offer a range of benefits, including greater consumer choice, enhanced risk management capabilities, and increased efficiency. These developments also pose new and complex risks for markets and challenges for policymakers and regulators. BSP and MAS state they are committed to working together and with other countries and authorities to promote an environment in financial services that fosters the development of the global economy, including in respect of the promotion of data connectivity and information sharing. [16 Nov 2020]




SEC Adopts Rules to Facilitate Electronic Submission of Documents

The Securities and Exchange Commission (SEC) has voted to adopt:

  • amendments to Rule 302(b) of Regulation S-T to permit the use of electronic signatures when executing authentication documents in connection with various documents filed with the SEC. Additionally, the SEC has amended certain rules and forms under the Securities Act, Exchange Act, and Investment Company Act to allow the use of electronic signatures in connection with certain other filings when these filings contain typed, rather than manual, signatures; and
  • rule amendments to require electronic filing and service of documents in administrative proceedings. These amendments also require redaction of sensitive personal information from various documents before filing with the SEC.

The amendments will become effective 30 days after publication of the adopting release in the Federal Register. Compliance will not be required until April 12, 2021, and there will be an initial 90-day phase-in period following this date. [17 Nov 2020]

SEC: Commissioner Lee Speech on Electronic Filings and Structuring Data

The SEC has published a speech delivered by Commissioner Allison Herren Lee entitled ‘The Promise of Structured Data: True Modernization of Disclosure Effectiveness’. In her speech, Commissioner Lee highlights three areas of focus with regard to disclosure effectiveness and modernization, namely:

  • expanding the use of XBRL beyond financial statements to proxy data, climate change and other environmental, social and governance (ESG) data, Management’s Discussion and Analysis (MD&A), and earnings releases;
  • continued emphasis on improving the accuracy and quality of structured data; and
  • the benefits of open, freely available financial identifiers. [17 Nov 2020]
CFTC Selects Winner of First Science Prize Competition and Innovator of the Year Award

The Commodity Futures Trading Commission (CFTC) has announced that a data platform developer based in Washington DC is the winner of Project Streetlamp – the CFTC’s first competition under the Science Prize Competition Act of 2015 – for developing an Artifical Intelligence (AI) tool that automatically creates a list of entities to add to the Registration Deficient (RED) List. The developer has also received the CFTC’s first Innovator of the Year award. [17 Nov 2020] 

CFPB and Colorado AG Announce Joint Virtual Office Hours on December 2, 2020

The Consumer Financial Protection Bureau (CFPB) and the Office of the Colorado Attorney General (AG) have announced joint, virtual office hours as part of the American Consumer Financial Innovation Network (ACFIN). This will provide innovators with the opportunity to discuss issues such as financial technology (FinTech), innovative products or services, and other matters related to financial innovation with officials from the CFPB and state partners.

The office hours will be held on December 2, 2020. [16 Nov 2020]

SEC: Director Blass Speech on Division of Investment Management’s Work

The SEC has published a speech delivered by Dalia Blass, Director of the Division of Investment Management, at the ALI CLE 2020 Conference on Life Insurance Company Products. In particular, Ms Blass discussed:

  • the Division of Investment Management’s response to the market disruptions caused by Covid-19;
  • the Division’s efforts to modernize regulations and facilitate healthy innovation;
  • the Division’s progress on the investors experience initiative; and
  • the Division’s efforts to be a more efficient regulator of the asset management industry. [10 Nov 2020]



Key contacts

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Nick Pantlin

Partner, Head of TMT & Digital UK & Europe, London

Nick Pantlin
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Alex Kay

Partner, London

Alex Kay