Global Financial Regulatory Blog

UK Independent Anti-Slavery Commissioner Publishes Recommendations for the Financial Industry

Posted in Environmental, Social and Governance (ESG)

The report’s recommendations cover a number of areas, including culture and strategy, monitoring and reporting, investor engagement, policy formation and employee training, and philanthropy.  

By Paul A. Davies and Michael D. Green

A new report from the UK Independent Anti-Slavery Commissioner draws attention to how the financial services industry can help address the issue of modern slavery. The report, “Preventing Modern Slavery & Human Trafficking: An Agenda for Action across the Financial Services Sector” (the Report), aims to sound “a call to action for the industry”. The Report, which was released on 18 January 2021, is the result of a research and outreach project led by Themis in partnership with the Independent Anti-Slavery Commissioner’s Office and TRIBE Freedom Foundation.

As the Report notes, in relation to financial services, modern slavery is less overt and usually refers to employment of low skilled contract workers such as cleaning or catering workers. Continue Reading

Singapore: MAS Revises Technology Risk Management Guidelines

Posted in Conduct of Business

The guidelines aim to promote the adoption of robust practices for managing technology risks in the financial sector.

By Farhana Sharmeen and Marc Jia Renn Tan

On 18 January 2021, the Monetary Authority of Singapore (the MAS) issued revised guidelines (the Guidelines) to take into account the fast-changing cyber threat landscape and financial institutions’ increased reliance on cloud technologies, application programming interfaces (APIs), and rapid software development. The Guidelines apply to all banks, payment services firms, and brokerage and insurance firms.

The Guidelines, which became effective immediately on the date of issue, aim to support financial institutions by providing them a framework of best practices for overseeing technology risk governance, practices, and controls to address technology and cyber risks. The Guidelines are not meant to be exhaustive or prescriptive, and have incorporated feedback received from the public consultation conducted in 2019. Continue Reading

Organisational Culture and Conduct

Posted in Conduct of Business, Market Misconduct

The role and expectations of bystander employees: the missing piece of the puzzle?

By David Berman, Catherine Drinnan, Joseph B. Farrell, Sarah Gadd, Lilia B. Vazova, and Nell Perks

While much attention continues to be paid to the implementation and maintenance of effective whistleblowing and speak-up frameworks (which tend to focus predominantly on reporting post-event, coupled with safeguarding the ‘reporter’ from any adverse consequences), and to the importance of creating a ‘psychologically safe’ environment in the workplace, there has to date been relatively little focus on the real-time interventional role of the employee bystander. For example, in a scenario in which an employee observes ‘toxic’ conduct directed at a colleague by a fellow employee, such as bullying, harassment or racism, should the witnessing employee have an obligation to intervene on behalf of the ‘victim’ (in addition to an expectation that they subsequently report the incident)?

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10 Key Focus Areas for UK-Regulated Financial Services Firms in 2021

Posted in Conduct of Business, Environmental, Social and Governance (ESG), Market Misconduct, Regulatory Reform, Securities Regulation

This annual publication outlines some of the primary focus areas in 2021 for UK-regulated financial services firms. Some of these topics are attracting attention because they are an emerging trend, or because they are at a key stage in the implementation cycle. Other topics are longstanding, but remain at the top of the PRA’s and FCA’s priority lists.

While this publication looks beyond Brexit and COVID-19, inevitably, in the short term, these issues continue to be dominant themes.

We hope you find this publication useful as a checklist to benchmark against your own “to do” list.

Read the publication here.

SEC Staff Issues No-Action Relief to Broker-Dealers From Reg BI and Form CRS Obligations Related to Certain Family Offices

Posted in Markets and Investments, Securities Regulation

The no-action relief applies to family offices with at least US$50 million in total assets (Institutional Family Offices) and requires broker-dealers seeking to rely on the relief to establish and maintain specific additional policies and procedures.

By Dana G. Fleischman, Stephen P. Wink, Naim Culhaci, and Deric Behar

On December 23, 2020, the Staff of the Division of Trading and Markets (Staff) of the US Securities and Exchange Commission (SEC) issued a no-action letter to the Securities Industry and Financial Markets Association (SIFMA) granting relief to broker-dealers from Regulation Best Interest (Reg BI) and Form CRS in relation to recommendations made to Institutional Family Offices under certain circumstances.
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PRA Publishes Findings on Its Evaluation of the SMCR

Posted in Regulatory Reform

The PRA has released a largely positive report, along with nine follow-up actions and recommendations on the SMCR for PRA-regulated firms.

By Rob Moulton, Katy Sanders, and Anna Lewis-Martinez

The PRA reviewed the operation of the Senior Managers and Certification Regime (SMCR) against its original objectives and examined whether there have been any unintended consequences. The evaluation covered the period 2019-2020, included evidence from internal and external sources, and examined each component of the SMCR (including across the life cycle of firm and supervisory activity). Continue Reading

Key Regulatory Developments in Hong Kong and Singapore: November 2020

Posted in Regulatory Reform

Regulators propose new regulations for virtual asset exchanges and enhanced customer identity verification requirements, and launch an innovative commercial data interchange.

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

This blog post summarises key regulatory developments in Hong Kong and Singapore during November 2020, including:

— The Hong Kong FSTB’s consultation proposing a new regulatory framework for virtual asset exchanges
— The HKMA’s new commercial data interchange initiative
— The MAS’ consultation proposing requirements to strengthen financial institutions’ non-face-to-face identity verification process of individuals
— The MAS’ guidance to financial institutions to review security controls amidst COVID-19
— The MAS’ publication of its 2019/2020 enforcement report

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Monetary Authority of Singapore Proposes Stricter Identity Verification Requirements

Posted in Regulatory Reform

The proposal would require financial institutions to use certain categories of information for non-face-to-face verification before undertaking transactions or requests.

By Farhana Sharmeen and Gen Huong Tan

In November 2020, the Monetary Authority of Singapore (the MAS) published a consultation paper proposing to issue a Notice on Identity Verification (the Notice) that would require financial institutions to obtain specific categories of information to verify an individual’s identity for non-face-to-face financial transactions.

The Notice would apply to a broad range of entities regulated by the MAS, including licensed banks, insurers, registered insurance brokers, capital markets services licensees, registered fund management companies, financial advisers, and licensed payment services providers. Continue Reading

Benchmarks: Delegated Acts on ESG Disclosures Published and Transitional Period for Third Country Benchmarks Extended

Posted in Benchmark Regulations

Three delegated acts that supplement the EU Benchmarks Regulation will come into force on 23 December 2020.

By Nicola Higgs, Becky Critchley, Ella McGinn, and Anna Lewis-Martinez

The long-awaited delegated acts (Delegated Acts) required by Regulation (EU) 2019/2089 (the Low Carbon Benchmarks Regulation), which amends the EU Benchmarks Regulation (BMR), have been published in the Official Journal of the European Union (OJ). The Delegated Acts will enter into force on 23 December 2020, 20 days after their publication on 3 December 2020. No substantial changes have been made to the official texts since the Commission adopted the Delegated Acts on 17 July 2020.

The Delegated Acts set out (i) sustainability criteria in order for a benchmark to qualify as an EU Climate Transition Benchmark or EU Paris-aligned Benchmark, and (ii) the environmental, social, and governance (ESG) disclosure requirements for benchmarks provided in accordance with the BMR. Continue Reading