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In this regular update, we round-up FinTech-related regulatory developments for the week ending 27 November 2020.


BIS speech: Role of FinTech companies in green finance

The Bank for International Settlements (BIS) has published keynote speech delivered by Sabine Mauderer, Member of the Executive Board of Deutsche Bundesbank, on the role of financial technology (FinTech) companies in green finance. Ms Mauderer explained that FinTech companies can act as enablers of a greener financial system by:

  • collecting climate-related data;
  • analysing climate-related data; and
  • pushing green financial products using digital technology. [25 Nov 2020]


Covid-19: IOSCO Annual Meeting

The International Organization of Securities Commissions (IOSCO) has announced that its 45th Annual Meeting, which took place between 9 and 18 November 2020, addressed the impact of Covid-19 on capital markets and topics including:

  • progress made on IOSCO priority work on sustainable finance, financial stability risks, market fragmentation, asset management and retail market conduct; and
  • ways to contribute to the above priorities while addressing areas such as financial technology (FinTech), cyber resilience, technical assistance and capacity building.

IOSCO has approved two additional priority themes for 2021, namely:

  • financial stability and systemic risks in non-bank financial institutions (NBFIs); and
  • remote working, misconduct risks, fraud and scams, and operational resilience in the Covid-19 context. [23 Nov 2020]





Covid-19: G20 Riyadh Summit leaders' declaration

The G20 has published the leaders' declaration from the G20 Riyadh Summit, held between 21 and 22 November 2020. The leaders state that the G20 is committed to leading the world in shaping a strong, sustainable, balanced and inclusive post-Covid-19 era. In particular, the leaders stressed the need to build a resilient and long-lasting recovery through, among other things, international financial architecture and the financial sector, noting the importance of the work of bodies such as the FSB, Financial Action Task Force (FATF) and the International Monetary Fund (IMF). [23 Nov 2020]






Covid-19: FCA Handbook Notice No 82

The FCA has published Handbook Notice No 82, which provides a summary of legislative changes made on 22 October, 12 November and 26 November 2020, includes feedback on responses to various consultations, and sets out upcoming FCA board meeting dates. Among the changes covered by this Handbook Notice are a number which are made in reference to Covid-19, including: the extension of the in-force date for the Conduct Rules for staff who are not Senior Managers, Certification Staff or board directors; the changes to push back by one year mandatory requirements related to the European Single Electronic Format (ESEF); and changes to the Consumer Credit Sourcebook (CONC) to accommodate guidance on deferring payments. [27 Nov 2020]




PSR: Notice of intention to operate confidentiality ring in relation to card-acquiring services market review

The Payment Systems Regulator (PSR) has issued notice of intention to operate a confidentiality ring following publication of its interim report of the market review into card-acquiring services, which is currently open to consultation. The confidentiality ring will allow disclosure, to certain interested parties, of material underlying the merchant survey which forms part of the market review. Specifically, access will be granted to a limited number of approved external economic and/or legal advisers of certain parties with an interest in the consultation; these advisers and their employer firms will be required to sign individual and firm-level undertakings.

The PSR invites interested parties to submit expressions of interest for their external legal and/or economic advisers to access the confidentiality ring by 4 December 2020. The PSR also invites parties expressing an interest to submit any comments they may have on the PSR’s proposed approach to disclosing the material.

Feedback to the consultation was originally requested by 8 December 2020. However, the PSR plans to extend the existing consultation in light of the introduction of the confidentiality ring. The PSR will make a further announcement in due course to confirm the duration of the confidentiality ring and the end of the extended consultation period. [27 Nov 2020]




Sir Geoffrey Vos speech on technologically-based reforms

Sir Geoffrey Vos, Chancellor of the High Court, spoke at the Bar Council's Annual Bar and Young Bar Conference on 19 November. Sir Geoffrey concentrated his remarks on  the importance of technologically-based reform of the business justice system to, 'make it fit for the 21st century and for the age of big data, a ubiquitous internet, smart systems, artificial intelligence (AI), smart contracts and the blockchain'.

Referencing the UK Jurisdiction Taskforce of the Lawtech Delivery Panel, Sir Geoffrey advised that the Taskforce was currently engaged in developing a standard form English law and jurisdiction dispute resolution process and accompanying clause for use in smart contracts and blockchain engagements. [27 Nov 2020]







CDEI: Review into bias in algorithmic decision-making

The UK Government's Centre for Data Ethics and Innovation (CDEI) has published the final report (and accompanying summary and appendix) of its review into bias in algorithmic decision-making. The review focused on the use of algorithms in significant decisions about individuals, and looked at four sectors, namely policing, local government, financial services and recruitment. The CDEI has proposed various recommendations, including:

  • the Government should place a mandatory transparency obligation on all public sector organisations using algorithms that have an impact on significant decisions affecting individuals;
  • organisations should be actively using data to identify and mitigate bias. They should make sure that they understand the capabilities and limitations of algorithmic tools, and carefully consider how they will ensure fair treatment of individuals; and
  • the Government should issue guidance that clarifies the application of the Equality Act to algorithmic decision-making. This should include guidance on the collection of data to measure bias, as well as the lawfulness of bias mitigation techniques (some of which risk introducing positive discrimination, which is illegal under the Equality Act).

The CDEI will help industry, regulators and the Government in taking next steps to ensure its recommendations are put into practice. [27 Nov 2020]




BoE: Green Notice on future changes to submission of statistical data to DSD 

The Bank of England (BoE) has published a Green Notice (2020/02), which outlines future changes to the submission of statistical data to the Data and Statistics Division (DSD). The BoE states that DSD is planning to move the collection of statistical data to the BoE Electronic Data Submission (BEEDS) portal.

The BoE also plans to move the reporting format from XML to XBRL, and it plans to release the draft XBRL taxonomy and data point model to software houses as soon as possible. If a firm does not use a software house to help it send statistical data, then it should let the BoE know via the OSCA help desk.

Migration to the new system will take place over an extended period and the BoE will have a pilot of early adopters. The BoE intends to move away from OSCA by the end of October 2022. More details will be released via Statistical Notices in due course. [25 Nov 2020]








FCA update on new RegData reporting platform

The FCA has issued a press release which explains how its new data collection platform, RegData, will provide a better user experience than Gabriel (the platform which RegData will replace).

The FCA has also updated its webpage on RegData, and has published informational videos introducing RegData (and accompanying transcript) and on moving to RegData from Gabriel (and accompanying transcript). [24 Nov 2020]



Covid-19: BoE Q3 Bulletin 2020

The Bank of England (BoE) has published its quarterly bulletin for Q4 of 2020, which focuses on cash in light of of Covid-19. The bulletin sets out:

  • cash demand before Covid-19 and the impact of Covid-19, including the growth in demand for banknotes;
  • the key drivers for the changes in transactional cash use; and
  • the longer-term impact of Covid-19 on cash demand. [24 Nov 2020]


Covid-19: FCA confirms successful applicants for digital sandbox pilot

The FCA has updated its webpage on the digital sandbox pilot to advise that 30 organisations will take part in the project to address challenges caused by Covid-19. The FCA received 94 applications across the following three use cases: fraud and scams, vulnerability, and SME lending. [23 Nov 2020]






Covid-19: ECB's Fabio Panetta on payments developments, the pandemic response, and the outlook

The ECB has published a speech delivered by Fabio Panetta, Member of the Executive Board, on the Eurosystem’s response to digital transformation in the context of payments. Mr Panetta highlighted the benefits of, and risks posed by, big technology companies (BigTech) and stablecoins. He also observed that as private money goes digital, sovereign money must also be 'reinvented', for example through a digital euro.

The ECB has also published Mr Panetta's interview with Expresso, which was largely focused on Covid-19, in particular the ECB's response, the possibility of a European 'bad bank' to deal with non-performing loans (NPLs), banks' distribution of dividends in 2021, and the US election. Mr Panetta also noted that the ECB's final conclusions regarding its strategy review will be published at the end of 2021. [27 Nov 2020]





EPC publishes 2021 EPC SEPA payment scheme rulebooks and implementation guidelines

The European Payments Council (EPC) has published the 2021 EPC SEPA payment scheme rulebooks (and related implementation guidelines), including the:

Annex IV of each 2021 rulebook contains a table summarising all changes made in each 2021 rulebook compared to the 2019 rulebook. All 2021 EPC SEPA payment scheme rulebooks will enter into force on 21 November 2021. [26 Nov 2020]



EU Commission and JFSA: Joint statement on EU-Japan Financial Regulatory Forum

The EU Commission and the Financial Services Agency of Japan (JFSA) have published joint statement on the 2nd meeting of the EU-Japan Regulatory Forum. Participants at the meeting discussed the impact of Covid-19, the regulation of financial benchmarks, recovery and resolution, digital finance, operational resilience, and sustainable finance.

The next forum meeting is expected to take place in Brussels in 2021. [24 Nov 2020]







APRA releases letter to ADIs and RFCs in response to submissions

APRA has released its response to a call of submissions on proposed updates to Economic and Financial Statistics (EFS) in a bid to modernise the data collection reporting standards and guidance. In response to the submissions, the Regulator released both clean and marked-up versions of the reporting standards and guidance on its website [24 Nov 2020].





Hong Kong

HKEX to introduce settlement acceleration platform for Stock Connect

The HKEX has announced that it will introduce HKEX Synapse, a new settlement acceleration platform for its Stock Connect programme.

HKEX Synapse utilises DAML smart contracts to standardise and streamline post-trade workflows of Northbound Stock Connect, to maximise efficiency for market participants in a transparent, secure and reliable manner, benefiting asset managers, global and local custodians and clearing participants.  It is an optional platform, and is expected to begin testing in 2021 with a group of pilot users, ahead of production deployment targeted for Q1 2022.

HKEX is partnering with The Depository Trust & Clearing Corporation (DTCC) to link HKEX Synapse to DTCC’s institutional trade processing services.  This integration enables global investors and HKEX participants to take advantage of central matching of cross-border transactions on the HKEX Synapse platform, automating the trade confirmation and settlement notification process.  Institutional investors participating in Northbound Stock Connect will be able to better manage their post-trade operations over different time zones, particularly in respect of adhering to Mainland securities market’s T+0 settlement cycle.

Further details of HKEX Synapse are available on a dedicated page of the HKEX website.  [24 Nov 2020]





Insurance Authority delivers regulatory updates at Hong Kong Actuarial Summit 2020

Dr Moses Cheng (Chairman of the Insurance Authority) and Mr Simon Lam (Executive Director, General Business of the Insurance Authority) delivered a welcome address and a presentation respectively at the Hong Kong Actuarial Summit 2020, where various regulatory developments were discussed (among others):

  • Group-wide supervision framework – The Insurance Authority is formulating implementation details for the framework, such as draft rules on group capital requirement and qualifying capital resources.  It aims to roll out the framework in the first half of 2021.
  • Risk-based capital regime – The Insurance Authority has completed the third quantitative impact study and is in the process of making technical adjustments to pillar 1 (capital adequacy framework) before launching industry consultation.  As for pillar 2 (own risk and solvency assessment), the Guideline on Enterprise Risk Management has taken effect and the first set of own risk and solvency assessment reports is due in June 2021.
  • IFRS 17 – The commencement date for the revamped accounting treatment for insurance contracts has been deferred until 2023.
  • Technological applications to insurance – The Insurance Authority has expedited the vetting of applications under the Insurtech Sandbox and approved nine pilot trials.  The Hong Kong Federation of Insurers has installed a virtual on-boarding platform for shared use by smaller insurers to bypass the technical evaluation stage of applications under the sandbox.  [25 Nov 2020]






SECT consultation on amendments to the Securities and Exchange Act B.E. 2535 (1992) and Derivatives Act B.E. 2546 (2003)

The Securities and Exchange Commission, Thailand (SECT) has published for consultation proposed amendments to the Securities and Exchange Act B.E. 2535 (1992) and Derivatives Act B.E. 2546 (2003). The amendments cover a range of matters, including: digital token offerings; the securities trading center; the protection of assets in the case of a securities depository’s bankruptcy; and the enhancement of SECT Supervision on Stock Exchange of Thailand (SET).

Comments are requested by 24 December 2020. [24 Nov 2020]





SEBI amends requirements for testing of software used in trading and risk management

SEBI has announced, with reference its guidelines on ‘Testing of software used in or related to Trading and Risk management’, that the requirement for mandatory mock trading sessions to facilitate testing of new software or existing software that has undergone any change of functionality shall be optional if a Stock Exchange provides a suitable simulated test environment and if a number of conditions are met. [24 Nov 2020]






SEC Issues Two Proposals in Relation to Securities Act Rule 701 and Form S-8: Equity Compensation to Platform Workers and Technical Updates

The Securities and Exchange Commission (SEC) has published two proposals in relation to Securities Act Rule 701, which provides an exemption from registration for the issuance of compensatory securities by non-reporting issuers, and Form S-8, which is the registration statement for compensatory offerings by reporting issuers. Both proposals are informed by responses to the SEC’s July 2018 concept release on compensatory security offerings and sales.

The two proposals are as follows:

  • the SEC has voted to propose rules that would permit an issuer to provide equity compensation to certain ‘platform workers’ who provide services available through the issuer's technology-based platform or system. The rules would be temporary and subject to percentage limits (no more than 15% of annual compensation), dollar limits (no more than $75,000 in three years) and other conditions. This proposal is intended to reflect changes in the composition and participation of the US workforce, particularly with regard to the ‘gig economy’;
  • the SEC has proposed additional amendments to Rule 701 and Form S-8 to modernize the framework for compensatory securities offerings more generally to allow employees and other workers to receive equity compensation from their company while maintaining important investor protections.

Feedback to both proposals is requested within 60 days following publication in the Federal Register. The SEC has published related joint statements by Commissioners Allison Herren Lee and Caroline A Crenshaw, and Commissioners Hester M Peirce and Elad L Roisman. [24 Nov 2020]

FINRA: Podcast Episode on AI in the Securities Industry

The Financial Industry Regulatory Authority (FINRA) has released a podcast episode from its virtual Artifical Intelligence (AI) Conference held earlier in November. The episode focuses on the first of the Conference’s sessions, ‘Industry Views on the Current and Future State of Artificial Intelligence’. [24 Nov 2020]

CFTC: TAC Meeting on December 14, 2020

The CFTC has announced that the Technology Advisory Committee (TAC) will hold a virtual public meeting on December 14, 2020, in which it will hear presentations from the TAC Subcommittees on virtual currencies, and distributed ledger technology (DLT) and market infrastructure. The TAC also expects to vote on a recommendation from the Cybersecurity Subcommittee.

Information on joining the meeting can be found on the webpage linked above. [23 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