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The following posts provide a snapshot of the principal European and global wholesale financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates. These posts focus on legal and compliance issues rather than accountancy or capital-related matters.

  • Government Details Proposed Financial Services and Markets Bill
    05/10/2022

    Following the Queen's speech yesterday, the government has published a briefing pack setting out details of the bills that it intends to introduce, including the so-called Brexit Freedoms Bill as well as key legislation relevant to financial services. The government will introduce a Financial Services and Markets Bill, which will, among other things:
    • Introduce new statutory objectives for the financial services regulators to support growth and international competitiveness.
    • Implement the changes to the wholesale markets arising out of the Wholesale Markets Review. HM Treasury confirmed in March of this year that the changes that will be made by legislation and where powers will be delegated to the financial services regulators for rules to be made. Among the changes are the removal of the share trading obligation and the double volume cap, changes to the derivatives trading obligation, taking OTC derivatives that are economically equivalent to exchange traded commodity derivatives out of the position limits regime, and the establishment of a consolidated tape.

    Read more.
  • UK Payment Systems Regulator Panel Publishes Report on Digital Payments Initiative
    05/10/2022

    The U.K. Payment Systems Regulator Panel has published a report on its Digital Payments Initiative, which investigated potential barriers to the take-up of digital payments and possible solutions. The Panel advises the PSR on a continuous basis but undertook the Digital Payments Initiative as a special project to address the issue of consumers failing fully to embrace the benefits of digital payments.

    Read more.
  • European Commission Consults on Revised EU Payment Services Directive and Open Finance
    05/10/2022

    The European Commission has published three consultations on the revised EU Payment Services Directive and on open finance. The results of the consultations will help inform the Commission's review of PSD2 and proposed legislation on a broader open finance framework, as part of plans developed under the 2020 EU Digital Finance Strategy and EU Retail Payments Strategy. The review of PSD2 will take stock of the impact that the Directive has had on the EU payments market and whether its objectives have been achieved. The open finance review will gather evidence on the current state of open finance, its further development and effective consumer protection. The EU is proposing to develop an open finance framework, as outlined under the EU's 2021 communication on the Capital Markets Union.

    Read more.
  • Queen’s Speech Confirms Government Will Proceed with Brexit Freedoms Bill
    05/10/2022

    Prince Charles, Prince of Wales, delivered the Queen’s speech in which he announced that the government will be introducing the so-called Brexit Freedoms Bill, which was first announced by Prime Minister Boris Johnson on January 31, 2022, and is intended to make it easier to amend or remove retained EU laws to better suit the U.K.’s circumstances and policies. The Brexit Freedoms Bill will work in tandem with a government drive to reform, repeal and replace EU laws that are seen as outdated, cumbersome or otherwise not in the U.K.’s national interest.

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  • HM Treasury Publishes Policy Statement on Protecting UK Wholesale Cash Infrastructure
    04/26/2022

    HM Treasury has published a Policy Statement on its plans for protecting the U.K.'s wholesale cash infrastructure. In recent years, use of cash has diminished in favour of cashless transactions but the U.K. government is aware of the need to continue supporting cash transactions, particularly for elderly and vulnerable groups. The government has been investigating the use and protection of cash payments in the retail sector, including a consultation on protecting access to cash launched in 2021. The results of that consultation are under consideration.

    Read more.
  • European Commission Consults on Potential Digital Euro
    04/05/2022

    The European Commission has launched a targeted consultation on a possible digital euro. The EU is considering introducing a digital euro for retail payments, which would be available alongside cash. A decision has not yet been made. The European Central Bank, responsible for the design and implementation of the digital euro, launched a project in July 2021 to get ready for the potential issuance of a digital euro. The introduction of a digital euro would require an EU regulation based on a proposal by the European Commission and agreed through the co-legislative process. Legislative changes would also be needed for existing legislation (e.g., under the revised Payment Services Directive). Central banks from non-euro area Member States also envisage issuing digital currencies.

    Read more.
  • UK To Bring Stablecoins Used for Payments Under Regulation
    04/04/2022

    Following the call for evidence issued in January 2021, the U.K. government has confirmed that it will bring the issuing or facilitating the use of stablecoins used as a means of payment into the U.K. regulatory perimeter, in an announcement by John Glen, MP, at U.K. Fintech Week. The details were published in a response to the consultation.

    Consistent with the proposals under the Future Regulatory Framework Review, the government will set the regulatory perimeter, objectives and principles and the regulators - the Financial Conduct Authority, the Bank of England and the Payment Systems Regulator - will set out the detailed requirements in rulebooks. The government also confirms that it intends to consult later in 2022 on regulating a wider set of crypto activities, including trading of cryptocurrencies such as Bitcoin and Ether.

    Read more.
  • UK Payment Systems Regulator Highlights Potential Cyber Security Risks Arising from the Situation in Ukraine
    03/01/2022

    The U.K. Payment Systems Regulator has issued a statement on the situation in Ukraine. The PSR encourages firms to reflect on how they are managing their risks related to the situation, in particular:
    • the ability of the firm to bear an attack from a sophisticated state actor;
    • whether staff are available to handle an elevated cyber risk from state sponsored and other actors; and
    • implications of sanctions for third-party suppliers, and the resilience of those suppliers.

    The PSR highlights the guidance issued by the National Cyber Security Centre on actions to take in response to the Ukraine situation, and it warns firms to remain vigilant of any cyber security threat.
  • Financial Stability Board Publishes 2022 Work Priorities
    02/17/2022

    The Financial Stability Board has published a letter to G20 Finance Ministers and Central Bank Governors outlining its work priorities for 2022, which are:
     
    • Supporting financial market adjustment to a post-COVID-19 world: the FSB observes vulnerabilities in the financial system, such as embedded leverage in some parts of the system and rising real estate and other asset valuations, which could pose risks to stability in the event of tightening financial conditions. Uneven unwinding of pandemic support measures is also a risk and the FSB will prepare an interim report in July and final report in October on policy considerations to support a more even global pandemic recovery.

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  • UK Payment Services Regulator Announces Closure of Phase 1 Technical Environment for Confirmation of Payee Services
    02/10/2022

    The U.K. Payment Systems Regulator has announced a phase-out of the Phase 1 technical environment that enables certain U.K. payment services providers to provide confirmation of payee services. The PSR's Specific Direction 11, which comes into effect on February 11, 2022, requires existing Phase 1 CoP participants to operate within the Phase 2 technical environment from May 1, 2022. The Phase 1 technical environment will then permanently close on May 31, 2022. Phase 1 participants are expected to provide information, including their intended switchover date and a description of their progress towards achieving switchover, to Pay.UK, the body responsible for maintaining Phase 1 standards, on a monthly basis.

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  • Permanent Lower Threshold for Notification of Net Short Positions Under EU Short Selling Regulation Announced
    01/11/2022

    A Commission Delegated Regulation, published in the Official Journal of the European Union, amends the EU Short Selling Regulation to make permanent the lower notification threshold for notifying national regulators of net short positions held in the shares of companies traded on EU regulated markets. The threshold for notification will be 0.1% of the issued share capital of the company in question and each 0.1% above that. The lower threshold will apply from January 31, 2022.

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  • European Banking Authority Seeks to Address Divergence on Use of Strong Customer Authentication Exemption
    10/28/2021

    The European Banking Authority is consulting on draft Regulatory Technical Standards to amend the existing RTS on strong customer authentication and common and secure open standards of communication under the EU Payment Services Directive (known as PSD2). Responses to the consultation may be submitted until November 25, 2021.

    PSD2 requires payment service providers to apply SCA each time a customer accesses their payment account online. The existing RTS govern the process by which payment service providers authenticate the identity of customers and provide exemptions to the SCA requirements. One of the exemptions is available, on a voluntary basis, when a customer accesses limited payment account information, provided that SCA is applied for the first access and at least every 90 days subsequently. The EBA is proposing to make the exemption mandatory for PSPs where the account information is accessed through an account information service provider, subject to certain conditions being met to ensure the safety of the user's data. The exemption would remain voluntary when a user directly accesses the account information.
  • UK Government Sets out Key Actions to Secure Its Vision for Payments
    10/11/2021

    HM Treasury has published a response to the Payments Landscape Review call for evidence.  The government sets out the key areas and steps for government, regulators, and industry to achieve a payments sector at the vanguard of technology and innovation.  

    Read more.
  • UK Government Proposes Measures to Protect Direct Access to Cash
    07/01/2021

    HM Treasury has opened a consultation on policy proposals for geographic access requirements upon designated firms to protect access to cash across the U.K. The consultation follows the Access to Cash: Call for Evidence, published in October 2020, which sought views on the considerations on how to maintain a sustainable network of retail cash infrastructure in the U.K. and support the use of cash by people and businesses over time. Responses to the consultation may be submitted until September 23, 2021.

    The main proposal is the introduction of geographic requirements based on cash access (e.g. ATM) facilities being available within maximum distances of a minimum percentage of the population. Geographic parameters are already used in cash provision - LINK's ATM scheme, for example, has committed to protecting free-to-use ATMs more than 1km away from the next nearest free-to-use source of cash and protecting free access to cash on high streets that do not have a free-to-use source of cash within 1 km. The Post Office Network is obliged to ensure that 99% of the total population must be within 3 miles of their nearest Post Office and 95% must be within 1 mile. HMT's proposals for designated firms would impose minimum requirements that ensure reasonable access to withdrawal and deposit facilities for individuals and reasonable access to deposit facilities for SMEs. The government does not intend to consider further factors, such as local needs, deprivation, vulnerability, and service levels, which will be for the industry to address. Flexibility would be built in to the legislative provisions to allow the government to adjust the requirements over time.

    Read more.
  • UK Taskforce on Innovation, Growth and Regulatory Reform Publishes Recommendations
    06/16/2021

    The Taskforce on Innovation, Growth and Regulatory Reform has published its report, making several recommendations for reforming the U.K.'s approach to regulation as well as practical suggestions for implementing the reforms. The main recommendation tasks the government with building a U.K. regulatory framework that has proportionality at its core and that is based on the principles of the common law. The report also provides specific proposals for regulatory reforms across several sectors, identified as high growth sectors, including the financial services sector. The TIGRR recommendations will be progressed by the newly established Brexit Opportunities Unit, which is being led by Lord Frost, Minister of State at the Cabinet Office. Consultations on proposals to implement these ambitious recommendations are expected later this year.

    The TIGRR report recommends the approach to regulation is reformed along traditional common law lines, moving away from the EU codified system. The report suggests that the government reconsiders the approach to regulation with the aim of enhancing productivity, encouraging competition and invigorating innovation.

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  • UK Discussion Paper on Systemic Stablecoins Published
    06/07/2021

    The Bank of England has published a discussion paper on new forms of digital money that are potentially systemically important, focusing on systemic stablecoins. HM Treasury recently consulted on bringing certain crypto-assets into the U.K. regulatory perimeter and proposed that the BoE would regulate systemic stablecoins (under the Banking Act 2009) and that the Financial Conduct Authority would be responsible for consumer protection and conduct regulation. Feedback to the discussion paper can be submitted until September 7, 2021. The feedback will inform the BoE's next steps and it will consult on a specific regulatory framework for stablecoins, pending the finalization of the anticipated legislation.

    According to the BoE, systemic stablecoins would be those that have the potential to scale up and grow rapidly and become widely used for payments by individuals and non-financial businesses. Non-systemic stablecoins would be those that are not widely used for payments and would not be subject to regulation by the BoE. Systemic stablecoins would be: (i) denominated in sterling; (ii) backed by assets that make them stable in value, unlike crypto-assets that have no safeguard, such as Bitcoin; and (iii) would not be created by lending to the real economy, unlike commercial bank money.

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  • Financial Stability Board Consults on Global Targets for Addressing the Four Challenges of Cross-Border Payments
    05/31/2021

    The Financial Stability Board has launched a consultation on proposed global targets for addressing the four challenges to cross-border payments. The G20 is prioritizing the enhancement of cross-border payments and the FSB states that public authorities have an important role to play in leveraging opportunities and addressing challenges in both existing and new arrangements supporting cross-border payments. In November 2020, the G20 endorsed the FSB's Roadmap and the related 19 Building Blocks. The Roadmap presents a high-level plan for tackling the issues and sets both short-term and longer-term goals and milestones. The Building Blocks indicate where further public and private sector work would enhance cross-border payments and address the frictions ascertained by the FSB. The consultation closes on July 16, 2021. The FSB will publish its final recommendations to the G20 in October 2021.

    Read more.
  • European Securities and Markets Authority Issues Call for Evidence on Digital Finance
    05/25/2021

    Following the publication by the Commission of its Digital Finance Strategy in September 2020, the Commission has asked the European Supervisory Authorities for technical advice on the regulatory and supervisory challenges of three areas, namely the growing fragmentation of value chains in finance, digital platforms and bundling of various financial services, and groups combining financial and non-financial activities.

    Read more.
  • UK Conduct Regulator Warns E-Money Firms on Misleading Customers
    05/18/2021

    The U.K. Financial Conduct Authority has written to the CEOs of electronic money firms asking them to ensure that their customers are aware of how their money is protected. According to the FCA, many e-money firms (some of which are start-ups and FinTechs) compare their services to traditional bank accounts and portray in their financial promotions their services as an alternative to a bank account, but do not adequately disclose the differences in protections between e-money accounts and bank accounts. In particular, e-money firms do not make it clear enough that Financial Services Compensation Scheme protection does not apply to e-money accounts. The warning follows the FCA's publication in summer last year of a letter to CEOs and guidelines on safeguarding which set out the FCA's expectations of e-money firms in light of the increased use of e-money accounts during the pandemic.

    Read more.
  • European Central Bank Publishes Amendments to Systemically Important Payment Systems Regulation
    05/05/2021

    An amending Regulation (Regulation (EU) 2021/728) and two amending Decisions (Decision 2021/729 and Decision 2021/730) have been published in the Official Journal of the European Union, introducing certain changes to the SIPS Regulation on oversight requirements for systemically important payment institutions. The SIPS Regulation applies to systemically important large-value and retail payment systems and is designed to improve their safety and efficiency. Draft versions of the amending Regulation and Decisions were consulted on between November 2020 - January 2021 and proposed: (i) changes to the criteria for determining which of the Eurosystem central banks should be the competent authority for oversight of a SIPS; (ii) introduction of an additional methodology for identifying a payment system as a SIPS; and (iii) introduction of a phasing-out period for the reclassification of a SIPS as a non-SIPS.

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  • UK Law Commission Consults on Digital Assets and Electronic Trade Documents
    04/30/2021

    The U.K. Law Commission has launched two consultations, one on digital assets and the other on electronic trade documents. Responses to the consultations can be submitted until July 30, 2021.

    Digital Assets

    The Law Commission has issued a Call for Evidence on digital assets following a request from the government for recommendations for reforms to U.K. laws that will ensure that the laws can accommodate both cryptoassets and other digital assets. The Call for Evidence will be followed by a consultation at the end of 2021 with proposals for law reforms.

    The existing laws of England and Wales do not provide legal certainty as to the legal status of digital assets. Providing certainty would encourage the use of the laws of England and Wales and jurisdiction in digital asset transactions. The Call for Evidence requests feedback about, and evidence of, the ways in which digital assets are being used, treated and dealt with by market participants. It also seeks views on the potential consequences of digital assets being "possessable."

    Read more.
  • HM Treasury Publishes Response to Consultation on Insolvency Changes for Payment and Electronic Money Institutions
    04/26/2021

    HM Treasury has published its response to feedback on its December 2020 consultation on a proposed Special Administration Regime for payment institutions and electronic money institutions that fall within the scope of the Payment Services Regulations 2017 and the Electronic Money Regulations 2011. The SAR is designed to address shortcomings of the existing insolvency regime and would apply alongside Part 24 of the Financial Services and Markets Act 2000, which would also be extended to apply in full to PIs and EMIs. Key objectives of the regime will include returning customer funds as soon as reasonably practicable, facilitating timely cooperation with payment systems and authorities and rescuing the institution as a going concern or winding it up in the best interests of creditors.

    Read more.
  • Kalifa Review of UK Fintech Published
    02/26/2021

    HM Treasury has published the highly-anticipated Independent Strategic Review of U.K. Fintech, led by Ron Kalifa OBE. The aim of the recommendations is to, among others, ensure the U.K.'s competitiveness, attract investments for individual fintechs and raise the U.K.'s status as a global hub. The Kalifa Review makes recommendations in five key areas: (i) policy and regulation; (ii) skills and talent; (iii) investment; (iv) international attractiveness and competitiveness; and (v) national connectivity. The delivery of these recommendations is to be led by the Centre for Finance, Innovation and Technology, which is mandated by the Government but led by the private sector. This post focuses on the policy and regulation discussion.

    Read more.
  • European Banking Authority Publishes Opinion on Removal of Obstacles to Account Access Under Revised Payment Services Directive
    02/22/2021

    The European Banking Authority has published an Opinion requiring EU national regulators to assess the steps taken by account servicing payment services providers to remove obstacles to the provision of account information services and payment initiation services by third-party providers.

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  • EU Launches Review of the Financial Collateral Directive
    02/12/2021

    The European Commission has launched a targeted consultation related to post-trade services, which considers the EU Financial Collateral Directive. The Commission is also consulting on the Settlement Finality Directive, combining the review of these two Directives since they are closely related. The consultations close on May 7, 2021. The FCD establishes a harmonized EU framework for the use of financial collateral to secure transactions. It provides for close-out netting provisions to be enforceable under their terms and ring-fences the operation of financial collateral arrangements should one of the parties become insolvent, creating protections from the usual insolvency laws of a Member State. The FCD consultation does not cover the re-use of financial collateral given under a security financial collateral arrangement by a collateral taker as this issue has recently been addressed in the Securities Financing Transactions Regulation. The consultation focuses on issues relating to the recognition of close-out netting provisions and its impact on SFD systems.

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  • EU Launches Review of the Settlement Finality Directive
    02/12/2021

    The European Commission has launched a targeted consultation related to post-trade services, which considers the EU Settlement Finality Directive. The Commission is also consulting on the Financial Collateral Directive, combining the review of these two Directives since they are closely related. The consultations close on May 7, 2021. The SFD establishes various insolvency carve-outs for designated market infrastructure systems and provides for finality of transactions within such systems. Under the protections currently afforded by the SFD, transfer orders which enter into designated systems within certain deadlines are guaranteed to be finally settled and cannot be unwound at the behest of insolvency officials, regardless of whether the sending participant has become insolvent or transfer orders have been revoked in the meantime. The SFD essentially excludes "insolvency claw-back" rules, such as those for transactions at an undervalue or trading by insolvent or near-insolvent entities, from applying to holdings in designated systems and modifies the timing of "moratorium" rules which prevent transactions by insolvents. This also gives certainty as regards holdings in central securities depositories and as to the finality of transactions in some clearing and payment systems. Under the SFD, each EU Member State automatically recognizes systems that have been designated by other Member States. However, there is no EU regime for third country systems, a lacuna which has already been fixed by the U.K. in its SFD laws after Brexit.

    Read more.
  • UK Payment Services Regulator Consults on Delivery and Regulation of the UK's New Payments Architecture
    02/05/2021

    The U.K. Payment Systems Regulator has opened a consultation on the delivery and regulation of the U.K.'s New Payments Architecture. The NPA will reorganize the clearing and settlement of most of the U.K.'s domestic interbank payments, including payments that currently use the BACS and Faster Payments systems. The PSR consulted last year on issues relating to competition and innovation in payment services and remains concerned about these issues. The PSR is also concerned that the current NPA programme will not provide value for money and will delay the achievement of the benefits of the NPA. The PSR is therefore seeking views on its proposals to reduce these risks to the successful delivery of the NPA. The proposals include narrowing the scope of the initial contract for delivery to those services that support the replacement and upgrade of Faster Payments and on ways to mitigate the risks to competition and innovation, including procurement, contractual provisions and governance provisions. Responses to the proposals on reducing the risk to delivery of the NPA may be submitted until March 19, 2021 and responses to the proposals on mitigating competition issues may be submitted until May 5, 2021.

    View the PSR's consultation paper on delivery of the NPA.

    View details of the PSR's consultation on competition and innovation.
  • UK Regulator Proposes Amendments to UK Technical Standards on Secure Customer Authentication
    01/28/2021

    The U.K. Financial Conduct Authority has launched a consultation on proposed changes to the U.K. Regulatory Technical Standards on secure customer authentication and common and secure methods of communication and on proposed payments-related amendments to the Perimeter Guidance Manual and the FCA Payment Services and Electronic Money Approach Document. The proposals are relevant for payment service providers, e-money issuers, payment institutions, e-money institutions and registered account information service providers (AISPs). Responses to the consultation may be submitted until February 24, 2021, for issues relevant to contactless payments, and until April 30, 2021 for the remaining proposals.

    Read more.
  • UK Government Proposes Extending Regulatory Perimeter to Capture Stablecoins
    01/07/2021

    HM Treasury has opened a consultation on the proposed U.K. approach to crypto-assets and stablecoins, in particular a proposal to bring stablecoins into the U.K. regulatory perimeter. Responses to the consultation may be submitted until March 21, 2021. The government will consider the responses to the consultation and publish a response with further details on how the approach would be implemented in law. If the policy approach is followed, the regulators would consult further on rules for firms.

    Read more.
  • HM Treasury Consults on Draft Rules for Insolvency Regime for Payment and Electronic Money Institutions
    12/17/2020

    HM Treasury has published a supplementary annex to its consultation on the U.K. Government's proposed Special Administration Regime for payment institutions and electronic money institutions. The SAR would address shortcomings of the existing insolvency regime for PIs and EMIs and would apply alongside Part 24 of the Financial Services and Markets Act 2000, which would also be extended to apply in full to PIs and EMIs.

    Read more.
  • HM Treasury Consults on Insolvency Changes for Payment and Electronic Money Institutions
    12/03/2020

    HM Treasury has launched a consultation on the U.K. Government's proposed Special Administration Regime for payment institutions and electronic money institutions that fall within the scope of the Payment Services Regulations 2017 and the Electronic Money Regulations 2011. The SAR would address shortcomings of the existing insolvency regime for PIs and EMIs and would apply alongside Part 24 of the Financial Services and Markets Act 2000, which would also be extended to apply in full to PIs and EMIs. Responses to the consultation should be submitted by January 14, 2021.

    Read more.
  • European Central Bank Consults on Changes to Systemically Important Payment Systems Regulation
    11/27/2020

    The European Central Bank is consulting on revisions to the Regulation on oversight requirements for systemically important payment systems (known as the SIPS Regulation). The SIPS Regulation applies to systemically important large-value and retail payment systems. The Regulation is designed to improve the safety and efficiency of those payment systems.

    Read more.
  • EU Consultation on Proposed Revisions to the Guidelines on Major Incident Reporting for Payment Service Providers
    10/14/2020

    The European Banking Authority has opened a consultation on proposed revisions to the Guidelines on major incident reporting under the revised Payment Services Directive. PSD2 requires payment services providers to establish and maintain effective incident management procedures for, among other things, detecting and classifying major operational or security incidents. PSPs are required to notify their home state regulator if a major incident occurs. The Guidelines, which have applied across the EU since January 1, 2018, stipulate the criteria that PSPs should use to classify an operational or security incident as "major." Major incidents must be reported to a PSP's national regulator using the format provided in the Guidelines. The EBA is consulting on targeted amendments to the Guidelines. Responses to the consultation may be submitted until December 14, 2020. The EBA expects that the revisions to the Guidelines will become applicable by Q4 2021.

    Read more.
  • Final Roadmap for Enhancing Cross-Border Payments Published by the Financial Stability Board
    10/13/2020

    The Financial Stability Board has published a Roadmap for enhancing cross-border payments. The Roadmap is the final stage in the G20's three-stage process to enable countries to enhance their cross-border payments systems. The FSB published the Stage 1 report in April 2020, which identified existing challenges in cross-border payments systems and specified key "frictions" in the cross-border payments system that contribute to these challenges. The Stage 2 report, published by the Committee on Payments and Market Infrastructures in July 2020, covered the 19 building blocks where further public and private sector work would enhance cross-border payments and address the frictions ascertained by the FSB.

    Read more.
  • Financial Stability Board Publishes Final Recommendations on Global Stablecoins
    10/13/2020

    Following its consultation earlier this year, the Financial Stability Board has published a final report on the regulation, supervision and oversight of global stablecoin arrangements. In the report, the FSB discusses the characteristics of GSCs, the risks posed by GSCs, existing approaches to regulating and supervising GSCs and issues with cross-border supervision of GSCs. Alongside the report, the FSB has published a summary of the responses to its consultation.

    Read more.
  • EU Technical Standards Published on Central Contact Points Under the Revised Payment Services Directive
    10/09/2020

    A Commission Delegated Regulation setting out Regulatory Technical Standards on central contact points under the revised Payment Services Directive has been published in the Official Journal of the European Union. The RTS apply where a payment institution or electronic money institution with its head office in one EU member state provides payment services on a cross-border basis, under the right of establishment, through agents in another (host) member state. PSD2 gives the national regulators in the host member state the option of requiring that payment institutions or electronic money institutions operating through agents must establish a central contact point in the host territory to ensure adequate communication and information reporting and effective supervision.

    Read more.
  • EU Report on the Potential for a Digital Euro
    10/02/2020

    The European Central Bank has published a report by the Eurosystem High-Level Task Force on a digital euro. The digital euro would be a form of central bank digital currency. No decision has been taken yet to issue a digital euro. The report sets out the reasons for having a digital euro, the potential impact of a digital euro, legal considerations, functional design possibilities and technical and operational approaches to digital euro services. A consultation on the potential launch of a digital euro is expected in October 2020.

    The Bank of England issued a discussion paper in March 2020 on the opportunities, challenges and design of a potential U.K. CBDC. The ECB and the BoE are two of the central banks that are investigating the potential of CBDCs. Other central banks include the Bank of Canada, the Bank of Japan, the Sveriges Riksbank, the Swiss National Bank and the Bank for International Settlements.

    View the ECB's report on a digital euro.
  • European Commission Sets out EU Retail Payments Strategy
    09/24/2020

    The European Commission has published a Communication on its EU retail payments strategy for the coming years. The payments sector has experienced significant change in recent years. Retail payments are increasingly dematerialized and disintermediated, with large technology companies playing a more significant part in the payments sector. The EU payments market is also largely fragmented along national borders, leading to a small number of large firms providing cross-border services and inhibiting domestic FinTechs. The Commission's strategic objective is to establish a clear EU policy framework for retail payments that manages the risk of inconsistencies and market fragmentation across the EU.

    Read more.
  • European Banking Authority Seeks to Promote RegTech Use
    08/12/2020

    The European Banking Authority has opened a consultation on RegTech and supporting the use of RegTech across the EU. Responses may be submitted until September 30, 2020. The EBA intends to report on the use of RegTech in the first half of 2021. The survey is focused on financial institutions and ICT third party providers. The EBA is seeking to understand the extent and impact of RegTech for regulatory, compliance and reporting requirements of regulated firms. In particular, the EBA is looking at mapping and understanding existing RegTech solutions, identifying barriers and risks relating to the use of RegTech and analyzing how to facilitate the application of RegTech across the EU. The consultation covers ongoing monitoring of business relationships and transactions for anti-money laundering obligations, creditworthiness assessments, compliance with security standards, including information security, cybersecurity and payment services and supervisory reporting.

    View the EBA's survey.
  • UK Government Launches Payments Landscape Review
    07/28/2020

    HM Treasury has launched a call for evidence on the U.K.'s payments landscape, which is the first stage of the Payments Landscape Review announced in June 2019. The government is seeking input on the opportunities, gaps and risks that need to be addressed to support the U.K.'s position as being at the forefront of payments technology. Responses may be submitted until October 20, 2020. The government will publish a summary of the responses it receives and set out next steps for the review.

    In the call for evidence, the government sets out the steps taken to achieve the aims that were published in 2012 to support the high-level strategy of ensuring that end user consumers and businesses benefit from the U.K. payment networks. Feedback is sought on the extent to which those aims have been achieved.

    HM Treasury also discusses the main incentives for new payment systems and services, covering the New Payments Architecture, Faster Payments, the impact of Open Banking on how the systems are used, trends towards new service providers and payment chains and development in cross-border payments. The call for evidence also reflects on the wider work being undertaken on crypto-assets and stablecoins.

    View the call for evidence on the U.K.'s payments landscape.
  • Stage 2 Report on Enhancing Cross-Border Payments Published
    07/13/2020

    The Committee on Payments and Market Infrastructures has published a report on enhancing cross-border payments and building blocks of a global roadmap. The report forms the second stage of the G20’s three-stage process to develop a roadmap that will enable countries to enhance their cross-border payments systems. The Financial Stability Board published the Stage 1 report in April 2020, which identified existing challenges in cross-border payments systems and specified key “frictions” in the cross-border payments system that contribute to these challenges. The third stage will involve coordination between the FSB and CPMI, together with other international organizations, to compile a roadmap for implementing the improvements. The FSB published a statement welcoming the CMPI report and confirmed that it intends to publish the Stage 3 report, which will be the roadmap for enhancing cross-border payments, in October.

    Read more.
  • UK Payment Systems and Conduct Regulators Publish Joint Statement on Access to Cash
    06/16/2020

    The U.K. Payment Systems Regulator and U.K. Financial Conduct Authority have published a joint statement on their approach to maintaining access to cash for those that need it in light of bank branch and cash machine closures due to COVID-19. The regulators have adopted a series of actions, including mapping which regions have seen branch and cash machine closures, working with banks, building societies, the Post Office and Link to ensure access to these facilities is re-established as soon as possible and focusing on the needs of vulnerable consumers who require ongoing access to cash. In the longer-term, the regulators will work to ensure reasonable access to cash is maintained, including through use of shared services and local community initiatives, and anticipate additional powers to preserve access to cash from upcoming legislation announced in the U.K. Government’s 2020 budget.
     
    View the PSR's statement on access to cash.
     
    View the FCA's statement on access to cash.
     
    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • European Banking Authority Provides Additional Opinion on Strong Customer Authentication Requirements for Account Servicing Payment Service Providers
    06/04/2020

    The European Banking Authority has published an Opinion on the obstacles to the provision by third-party service providers of account information and payment initiation services under the revised Payment Services Directive. PSD2 and the related Regulatory Technical Standards on strong customer authentication and common and secure communication require account servicing payment service providers to establish access interfaces through which third-party service providers can securely access a customers’ payment accounts. Where the ASPSP provides a dedicated interface (as opposed to a modified customer interface), the SCA RTS require it to ensure that there are no obstacles to the provision of services by third-party service providers. The EBA has published the Opinion in response to queries from market participants on issues arising in this area.

    Read more.
  • UK Conduct Authority Consults on Guidance on COVID-19 Measures for Mortgage Lenders and Payments Firms
    05/22/2020

    The U.K. Financial Conduct Authority has published two consultations on its draft guidance for firms on mortgages and safeguarding customers’ funds during the COVID-19 pandemic.
     
    The first consultation relates to the FCA’s proposed guidance on how mortgage lenders should treat customers coming to the end of a payment holiday or those yet to request one. The timeframe for customers who have not yet benefited from a payment holiday to apply for one will be extended to October 31, 2020. The current ban on house repossessions will also be extended to October 31, 2020.

    Read more.
  • UK Conduct Regulator Grants Regulatory Forbearance From Strong Customer Authentication for E-Commerce Transactions
    04/30/2020

    The U.K. Financial Conduct Authority has granted firms an additional six months to implement strong customer authentication for e-commerce, extending the deadline from March 14, 2021 to September 14, 2021. The forbearance has been granted in light of the exceptional circumstances arising from COVID-19, in a bid to minimize disruption to consumers and merchants.

    Read more.
  • Financial Stability Board Consults on Global Stablecoins
    04/14/2020

    The Financial Stability Board has launched a consultation on global stablecoin arrangements. The consultation is in response to the G20 mandating the FSB to analyze potential regulatory issues posed by global stablecoins and to advise on multilateral responses. Responses to the consultation should be submitted by July 15, 2020. The FSB's final report is expected to be published in October 2020.

    Read more.
  • Financial Stability Board Writes to G20 on COVID-19 Response
    04/14/2020

    The Financial Stability Board has published a letter from Randal K. Quarles, the FSB Chair, to G20 Finance Ministers and Central Bank Governors on the response to the coronavirus pandemic. The letter highlights that the financial sector needs to respond to a "twin challenge": the increased demand for credit throughout the global economy and the uncertainty around the value of assets. The letter describes how the FSB and its member jurisdictions have responded to the pandemic to support local and global market functioning, discussing in particular, the steps taken to maintaining financial stability and supporting the real economy during the COVID-19 crisis. The letter also outlines the work to promote a global financial system that supports a strong recovery, including the FSB's prioritizing of certain areas, namely non-bank financial intermediation, the orderly transition away from LIBOR, utilizing technological innovation to assist in cybersecurity and promoting efficient and resilient cross-border payments.

    View the FSB's letter.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • Financial Stability Board Report on Global Enhancement of Cross-Border Payments
    04/09/2020

    The Financial Stability Board has published a report addressed to the G20 on international cross-border payment arrangements, where the sender and recipient of funds are in different jurisdictions. The report forms the first stage of the G20’s three-stage process to develop a roadmap that will enable countries to enhance their cross-border payments systems. The second stage will see the Committee on Payments and Market Infrastructures set out the building blocks of a system to improve cross-border payments and is due to be submitted to the G20 in July 2020. The third stage will involve coordination between the FSB and CPMI, together with other international organizations, to compile a roadmap for implementing the improvements. A report on the full three-stage process is expected to be delivered to the G20 in October 2020.

    Read more.
  • UK Conduct Regulator Publishes 2020/2021 Business Plan
    04/07/2020

    The U.K. Financial Conduct Authority has published its Business Plan for 2020/2021, which sets out its five key priorities for the next one to three years.

    Read more.
  • European Commission Consults on Retail Payments Strategy for the EU
    04/03/2020

    The European Commission has launched a consultation on a retail payments strategy for the EU. The Commission's final strategy will be published in Q3 2020 alongside the new digital finance strategy, on which the Commission launched a consultation on the same day. The consultation closes on June 26, 2020.

    The Commission states that the RPS will be a key to reinforcing the international role of the euro, strengthening Europe's influence and enhancing its economic autonomy. In addition, the Commission notes that safe and efficient payment systems and services will assist the EU in tackling emergencies, such as the coronavirus outbreak.

    Read more.
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