Global Financial Regulatory Blog

ISDA Gearing up to Launch IBOR Fallbacks Protocol

Posted in Benchmark Regulations, Derivatives

Regulators and industry groups strongly encourage market participants to adopt ISDA’s much-anticipated IBOR Fallbacks Protocol and Definitions Supplement.

By Yvette D. Valdez, Becky Critchley, Deric Behar, and Anna Lewis-Martinez

The International Swaps and Derivatives Association (ISDA) has published a statement from its Board of Directors confirming that on October 23, 2020 it will launch its IBOR (interbank offered rates) Fallbacks Protocol (the Protocol) and IBOR Fallbacks Supplement to the 2006 ISDA Definitions (the Supplement). The Supplement and the Protocol’s amendments will take effect on January 25, 2021.

According to ISDA’s October 9 announcement, all new derivatives contracts that incorporate the 2006 ISDA Definitions and reference one of the covered IBORs will contain the new fallbacks as of January 25, 2021. Derivatives contracts existing as of this date will also incorporate the new fallbacks if both counterparties have adhered to the Protocol or otherwise bilaterally agreed to include the new fallbacks in their contracts.

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Key Regulatory Developments in Hong Kong and Singapore: September 2020

Posted in Individual Accountability and Governance, Regulatory Reform

Regulators consult on anti-money laundering guidelines and issue guidance on cybersecurity, best execution, and senior management accountability.

By Farhana Sharmeen, Simon Hawkins, Kenneth Y.F. Hui, and Marc Jia Renn Tan

This blog post summarizes key regulatory developments in Hong Kong and Singapore during September 2020, including: (i) the SFC’s consultation on enhancements to its Guideline on Anti-Money Laundering and Counter-Financing of Terrorism for SFC-licensed firms (AML Guideline); (ii) the SFC’s thematic review report setting out the key findings and guidance on cybersecurity issues and vulnerabilities associated with mobile trading applications; (iii) the MAS’ consultation response to its proposal on best execution requirements; and (iv) the MAS’ new accountability guidelines for senior management.

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SEC Streamlines Rules for Over-the-Counter Equity Securities

Posted in Securities Regulation

The changes will have implications for the growing secondary market for non-listed securities.

By Stephen P. Wink, Naim Culhaci, and Deric Behar

On September 16, 2020, the US Securities and Exchange Commission (SEC) adopted amendments to Rule 15c2-11 (the amended Rule) of the Securities Exchange Act of 1934 (Exchange Act). Rule 15c2-11 sets forth requirements regarding the publication or submission by broker-dealers of quotations for over-the-counter (OTC) equity securities. Subject to limited exceptions, the Rule requires broker-dealers to obtain and review for reliability and accuracy certain basic information, including financial information, for each issuer before publishing or submitting a quotation for OTC securities. With respect to issuers subject to existing public reporting requirements, broker-dealers are required to obtain and review the issuer’s existing public disclosures. For issuers that are not subject to such requirements (“catch-all issuers”), broker-dealers are required to specifically obtain, review, and make available to investors specified types of information. With these amendments, the SEC seeks to modernize the Rule (which was last amended nearly 30 years ago) in line with the increased availability of information in today’s world and to generally provide greater transparency about OTC securities issuers to the investing public.

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Hong Kong SFC Consults on Enhancements to Anti-Money Laundering Guideline

Posted in Benchmark Regulations, Financial Crime

Amidst its continued regulatory focus on money laundering and terrorist financing risks, the SFC seeks to clarify and consolidate guidance for licensed firms.

By Simon Hawkins and Kenneth Y.F. Hui

On 18 September 2020, the Hong Kong Securities and Futures Commission (SFC) published a consultation paper proposing a number of amendments to its Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) for SFC-licensed firms (the Guideline).

The consultation paper was issued following a wave of high-profile disciplinary actions taken by Hong Kong regulators for breaches of AML/CFT requirements. The SFC proposes to clarify and consolidate certain AML/CFT requirements by incorporating into the Guideline relevant guidance from the Financial Action Task Force (FATF), including the FATF’s Guidance for a Risk-Based Approach for the Securities Sector (FATF Guidance) and the SFC’s previous circulars on AML/CFT standards and regulatory expectations. Continue Reading

Latham Launches 2nd Edition of Pioneering Culture Assessment Framework

Posted in Conduct of Business, Environmental, Social and Governance (ESG)

As COVID-19 sharpens the focus on corporate culture and ESG, organisations should be aware of heightened regulatory scrutiny.

Corporate culture remains high on the financial regulatory agenda, and it’s likely to attract even more attention in the future. The impact of the COVID-19 pandemic has sharpened the focus on organizational culture and the social and governance aspects of ESG, making it more crucial than ever for organisations to be aware of heightened regulatory scrutiny across regions and industries.

In light of the increased focus on corporate culture, Latham & Watkins has published the second edition of Culture — A Practical Framework for Sustainable Change, an easy to use toolkit and self-assessment guide that enables organisations to monitor, evaluate, and shape their workplace culture.

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Singapore: New Best Execution Requirements

Posted in Retail Markets, Securities Regulation

MAS confirms regulatory approach for best execution and timeline for compliance.

By Farhana Sharmeen and Marc Jia Renn Tan

On 3 September 2020, the Monetary Authority of Singapore (the MAS) issued a response to feedback about its proposal for capital markets service license holders, banks, merchant banks, and finance companies that conduct certain regulated activities (Capital Markets Intermediaries) to establish policies and procedures to place and/or execute customers’ orders on the best available terms (Best Execution). Continue Reading

Singapore: MAS Issues New Accountability Guidelines for Senior Management

Posted in Conduct of Business

The guidelines aim to strengthen the accountability of senior managers in financial institutions.

By Farhana Sharmeen and Marc Jia Renn Tan

On 10 September 2020, the Monetary Authority of Singapore (the MAS) issued guidelines (the Guidelines) to strengthen the accountability of individuals who are employed by, or acting for or by arrangement with, financial institutions, and are principally responsible for the day-to-day management of key functions in financial institutions (Senior Managers), and to promote ethical behaviour in financial institutions. The MAS also issued its response to frequently asked questions on the Guidelines (the FAQs) as well as an information paper on good practices in these areas (the Information Paper) gathered from a thematic survey and dialogue sessions conducted by the MAS with banks, insurers, and capital markets intermediaries. Continue Reading

FINRA Issues Guidance on Implementation of Rule 5110 Amendments Relating to Public Offerings

Posted in Securities Regulation

The guidance addresses how the filing and review of public offerings both before and after the amendments’ September 16 implementation date will be impacted.

By Dana G. Fleischman and Gail S. Neely

On September 14, 2020, the Financial Industry Regulatory Authority, Inc. (FINRA) updated its Public Offerings page, including its Frequently Asked Questions regarding amendments to Rule 5110 (the Corporate Financing Rule). As of September 16, 2020 (the Amendment Implementation Date), FINRA members participating in public offerings of securities must comply with Rule 5110 as amended by rule changes that were approved by the Securities and Exchange Commission on December 23, 2019 (the Amended Rule). Continue Reading

MAR and Sustainable Investing / ESG

Posted in Environmental, Social and Governance (ESG)

ESG and the reasonable investor test under MAR.

By David Berman, Rob Moulton, and Nicola Higgs


Historically, “profit maximisation” has been regarded as the sole (or predominant) objective for investors. Today, however, an ever-increasing proportion of investors have additional/alternative — sustainability (or ESG)-related — objectives[i]. These investors are not seeking profit at all costs — rather, “cleaner” profits that derive from the sustainable/green activities of investee companies. They are perhaps willing to forego some element of (near-term) profit in return for the environmental and societal benefit, brought about by the investee company, that (they hope) will accrue over time. Many such investors will believe that, in the long run, they may in fact end up maximising their returns — on the premise that sustainability-focused companies are more likely to survive (and thrive) in the future, while others will ultimately fail. Continue Reading