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The following posts provide a snapshot of the principal U.S., European and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.

  • International Organization of Securities Commissions Proposes Artificial Intelligence Requirements for Market Intermediaries and Asset Managers
    06/25/2020

    The International Organization of Securities Commissions has issued a consultation on proposed guidance on the use of artificial intelligence and machine learning by market intermediaries and asset managers. The draft guidance is intended to assist IOSCO member jurisdictions to develop appropriate regulatory frameworks to mitigate the risks arising from the increased use of AI and ML by financial institutions. Comments on the draft Guidance can be submitted until October 26, 2020.

    Read more.
  • European Commission Publishes Adjusted 2020 Work Program
    05/27/2020

    The European Commission has published an adjusted 2020 Work Program to reflect the unexpected challenges arising from COVID-19. The Commission still intends to deliver on the commitments made under its original Work Program, published in January 2020, but has adjusted the timing of certain actions necessary to achieve its objectives. An update on the delivery and expected timing of the objectives under the adjusted Work Program are set out in an amended version of Annex 1 on the Commission’s website.

    Read more.
  • UK Conduct Regulator Announces New Digital Sandbox in Response to COVID-19
    05/04/2020

    The U.K. Financial Conduct Authority has announced a new digital sandbox pilot program, which will provide regulatory support for innovative firms whose business plan addresses issues arising from the coronavirus pandemic. The FCA intends to open the sandbox for applications in summer and, in the meantime, welcomes any expressions of interest from interested innovative firms. The FCA had been planning a digital sandbox before the pandemic, but is fast-tracking the process in light of the challenges facing firms and how the sandbox might assist them.

    View the FCA's announcement.
    TOPICS: COVID-19FinTech
  • Financial Stability Board Consults on Cyber Incident Responses
    04/20/2020

    The Financial Stability Board has launched a consultation on its proposed guidance on Effective Practices for Cyber Incident Response and Recovery. The consultation seeks input on a toolkit of cyber incident responses compiled by the FSB based on effective actions taken by organizations across the world. The consultation paper opens with a series of specific questions for respondents to consider, before setting out the draft toolkit of responses on which feedback should be given. Responses should be submitted by July 20, 2020.

    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.
  • 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.
  • European Commission Consults on a New Digital Finance Strategy for the EU
    04/03/2020

    The European Commission has launched a consultation on a new digital finance strategy and FinTech action plan for Europe. The Commission states that although it is prioritizing fighting the coronavirus pandemic, it has decided not to delay this work because the digital finance can help to tackle issues arising as a result of the coronavirus pandemic. The Commission's final strategy, due to be published in Q3 2020, will set out the focus FinTech policy areas for the next five years. The consultation closes on June 26, 2020.

    Read more.
  • International Organization of Securities Commissions Publishes Report on Global Stablecoins
    03/23/2020

    The International Organization of Securities Commissions has published a report analyzing the regulatory issues arising from the use of global stablecoins and setting out how the existing IOSCO principles would apply to a global stablecoin, depending on its structure. IOSCO states that global stablecoins, depending on how they are set up, share features with regulated securities and other regulated financial instruments and services. Using a hypothetical global stablecoin case, the report analyzes how the IOSCO Principles and Standards would apply and also considers some of the broader implications. The report also includes an analysis, jointly conducted by IOSCO and the Committee on Payment and Market Infrastructures, of the applicability of the CPMI-IOSCO Principles for Financial Market Infrastructures. The conclusion is that the PFMI will apply to global stablecoin arrangements involving the performance of systemically important payment system functions or other FMI functions.

    View IOSCO's report on global stablecoin initiatives.
  • UK Joint Money Laundering Steering Group Consults on Crypto-Asset Exchange and Custodian Wallet Provider Guidance
    03/18/2020

    The U.K. Joint Money Laundering Steering Group has launched a consultation on its proposed new Guidance on how the U.K. Money Laundering Regulations apply to crypto-asset exchange providers and custodian wallet providers. The proposed Guidance will form a new Sector 22 section in Part II of the existing JMLSG Guidance. Comments on the proposed Guidance should be submitted by May 18, 2020.

    Read more.
  • UK Bank of England Opens Discussion on Central Bank Digital Currency Options
    03/12/2020

    The Bank of England has published a Discussion Paper on central bank digital currency opportunities, challenges and design. The BoE is one of several banks exploring introducing a CBDC. The Discussion Paper describes a platform model of CBDC that demonstrates the issues raised by the concept of a CBDC, highlighting both the risks and opportunities. The BoE stresses that the model does not represent any decision by the BoE on the design of a CBDC and is merely intended to aid the overall discussion. Indeed, the BoE emphasizes that no decision has been made on whether to introduce a CBDC and that it would need to ensure that the benefits outweigh any risks. If a CBDC were to be introduced in the U.K. it would be denominated in pounds sterling and would exist alongside cash and commercial bank deposits.

    Read more.
  • Guidance Published on Digital Identification Technologies for Anti-Money Laundering Purposes
    03/06/2020

    The Financial Action Task Force has published Guidance on how digital identification technologies can be used to conduct some aspects of customer due diligence for anti-money laundering purposes. The FATF presents a risk-based approach to the use of digital ID software, relying on a set of open source, consensus-driven assurance frameworks and technical standards for digital ID systems. In addition, the FATF sets out a series of recommendations for relevant authorities, regulated entities (meaning financial institutions, virtual asset service providers and designated non-financial businesses and professions) and digital ID services providers. The Guidance is non-binding, however, it clarifies the FATF's standards.

    View the FATF's Guidance on digital ID.
  • European Commission Launches Strategy for Data and Artificial Intelligence
    02/19/2020

    The European Commission has published a set of documents presenting its strategies for data and Artificial Intelligence. The main document is a Communication to the European Parliament, the European Council and relevant committees, entitled "A European strategy for data." The Communication describes the policy measures put forward by the European Commission for an EU data economy that aims to increase the use of, and demand for, data and data-enabled products and services in the EU over the next five years. The Commission argues for an attractive policy environment that provides for access to data, the flow of data across the EU, protection of personal data protection rights and an open yet assertive approach to international data flows that is based on European values. 

    Read more.
    TOPIC: FinTech
  • European Systemic Risk Board to Evaluate Systemic Cyber-security Risk
    02/19/2020

    The European Systemic Risk Board has published a report on cyber-security risk, which it has identified as a source of systemic risk to the global financial system. The report notes that the increased digitalization and interconnectedness of the global financial system makes it heavily reliant on ICT infrastructure and vulnerable to cyber attacks. The report provides an overview of key regulatory and industry initiatives aimed at combatting cyber risk, which include: (i) the 2019 International Organization of Securities Commissions’ Cyber Task Force report on cyber regulation; (ii) the European Banking Authority’s Guidelines on management of information and communication technology and security risks; and (iii) the European Securities and Markets Authority’s 2020-2022 Strategic Orientation, which establishes the dangers of cyber threats as an area of focus for ESMA and the other European Supervisory Authorities.

    Read more.
  • Financial Stability Board Highlights Vulnerabilities in Global Financial System
    02/18/2020

    The Financial Stability Board has written to G20 Finance Ministers and Central Bank Governors outlining the key focus areas for the FSB’s work ahead of the next G20 summit in Saudi Arabia in November 2020. The communication builds on certain areas highlighted as priorities in the FSB’s 2020 Work Program, published in December 2019.

    Read more.
  • International Organization of Securities Commissions Reports on Risks and Regulatory Considerations for Crypto-Asset Trading Platforms
    02/12/2020

    Following its consultation last year, the International Organization of Securities Commissions has published a report on the key issues and risks related to trading of crypto-assets on crypto-asset trading platforms (referred to as CTPs). The report aims to assist IOSCO member jurisdictions to assess the issues and risks relating to CTPs and sets out key considerations to be taken into account, including related toolkits for regulators. The considerations are: (i) access to CTPs; (ii) safeguarding assets; (iii) conflicts of interest; (iv) operations of CTPs; (v) market integrity; (vi) price discovery; and (vii) technology. IOSCO states that where a regulator has determined that a crypto-asset is a security, the provisions on securities trading and regulation apply.

    Read more.
    TOPICS: FinTechSecurities
  • International Organization of Securities Commissions Priorities for 2020
    01/30/2020

    The International Organization of Securities Commissions has published its annual work program, setting out its priorities for 2020. IOSCO will continue to focus on the five areas identified by its Board in 2019 as well as one new issue. The areas of focus are:
    • Crypto-assets: following its consultation last year, in February 2020, IOSCO will publish a final report on issues, risks and regulatory considerations relating to crypto-asset trading platforms. IOSCO will also publish the outcome of its review of the regulatory risks relating to investment funds exposures to crypto-assets. Finally, a report will be issued in early 2020 on issues relating to Global Stablecoins.
    Read more.
  • European Commission Publishes 2020 Work Programme
    01/29/2020

    The European Commission has published its 2020 Work Programme, setting out the EU’s strategic priorities for the next 12 months.

    Read more.
  • UK Regulators Take Steps to Establish Financial Services AI Public Private Forum
    01/23/2020

    The Bank of England and the U.K. Financial Conduct Authority are establishing the Financial Services AI Public Private Forum that Governor Mark Carney announced in June 2019. The regulators are calling for expressions of interest to join the forum from a range of sectors, including, but not limited to: (i) asset and investment management; (ii) banking; (iii) financial market infrastructure; (iv) fintech; (v) insurance; (vi) non-governmental organizations; and (vii) technology service providers.

    The purpose of the forum is to:
    • share information and understand the practical challenges of using AI and machine learning in financial services, including obstacles to implementation and potential risks and trade-offs;
    • establish the potential areas where principles, guidance, regulation or good practice might assist in the safe adoption of AI and machine learning; and
    • assess whether ongoing industry input would be useful and what form that could take, such as through industry codes of conduct or an industry standard board.

    View the FCA's announcement.

    View the BoE's webpage.

    View the terms of reference.
    TOPIC: FinTech
  • Group of Central Banks to Collaborate on Potential of Central Bank Digital Currencies
    01/21/2020

    The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Sveriges Riksbank, the Swiss National Bank and the Bank for International Settlements have announced that they have created a group to share experience as they assess the potential cases for central bank digital currency. The group will assess CBDC use cases, economic, functional and technical design choices, including cross-border interoperability and the sharing of knowledge on emerging technologies.

    View the announcement.
  • UK Court Confirms Bitcoin Status as Property for Certain Proprietary Claims
    01/17/2020

    A U.K. court has granted an interim proprietary injunction over Bitcoin held in an account of a cryptocurrency exchange after it had been transferred there as part of a cyber attack on a Canadian insurance company. The judgment in AA v Persons Unknown & Ors, Re Bitcoin [2019] EWHC 3556 (Comm) was given on December 13, 2019, and following the lifting of reporting restrictions, was released for publication on January 17, 2020. In coming to its decision, the High Court adopted the analysis as to the proprietary status of crypto assets set out in the recent legal statement by the UK Jurisdiction Taskforce. Although each case will depend on the relevant facts and issues, the decision confirms that crypto assets are a form of property capable of being the subject of a proprietary injunction.

    Read more.
  • Global Financial Innovation Network Announces Plans to Improve the Framework for Cross-Border Testing of Innovative Firms
    01/16/2020

    The Global Financial Innovation Network has published a report on lessons learned during the cross-border testing of innovative firms and their products. The GFIN was launched at the start of 2019 and is a network of organizations committed to supporting financial innovation in the interests of consumers. One of GFIN's priorities is to facilitate cross-border trials of emerging technologies across global jurisdictions (a global sandbox). The GFIN began a pilot with eight firms in April 2019, which aimed to develop testing plans for their cross-border trials. However, as none of the firms developed a testing plan that satisfied each jurisdiction's requirements, the GFIN could not progress things further. The GFIN has since met to consider how to take things forward and will further develop the framework of cross-border testing.

    The report describes the accomplishments and the challenges that arose during the pilot and sets out the proposed next steps and solutions to improve cross-border testing for the next phase. The solutions include establishing a central website for GFIN and creating a single application form for applicants, both of which should make it easier for prospective firms to find relevant information and submit an application. In the first half of 2020, the GFIN will open applications for the first formal cohort of participants.

    View the report.
    TOPIC: FinTech
  • European Banking Authority Publishes Report on Big Data and Advanced Analytics
    01/13/2020

    The European Banking Authority has published a report on big data and advanced analytics in the banking sector. The report sets out the findings of the EBA's review of big data and analytics and presents key pillars and elements of trust for the development, implementation and adoption of BD&AA by banks.

    Read more.
  • European Securities and Markets Authority Publishes 2020-2022 Strategic Orientation
    01/09/2020

    The European Securities and Markets Authority has published its Strategic Orientation for 2020-2022, setting out its longer-term objectives for regulating financial markets. The previous Strategic Orientation covered the period from 2016-2020 and so is coming to an end this year. Looking forward, ESMA aims to:
    • develop the EU Capital Markets Union by encouraging wider retail investor participation, which would assist with the diversification of funding sources and efficiency of capital markets;
    • promote sustainable finance and long-term oriented capital markets as part of the EU's commitment to meet the UN's Sustainable Development Goals by 2030;
    • examine the opportunities and risks of digitalization and technology for market participants and regulators;
    • guarantee the EU's voice in financial markets, aiming to maintain the openness of EU financial markets and develop EU co-operation with third-country authorities to ensure investor protection and financial stability; and
    • encourage proportionality, particularly with respect to SMEs and innovative companies, where ESMA may need to tailor its initiatives to meet its objectives.

    View ESMA 2020-2022 Strategic Orientation.
  • EU Political Agreement on Proposed Regulation on Cross-Border Crowdfunding Service Providers
    12/19/2019

    The EU legislative bodies have announced that political agreement has been reached on the proposed Regulation on European Crowdfunding Service Providers for Business. The proposed ECSP Regulation is part of the EU Capital Markets Union initiative and the Commission's FinTech Action Plan. It aims to increase access to finance through crowdfunding for innovative companies, start-ups and SMEs. The European Commission published the original legislative proposal on March 8, 2018. Since then, the text of the proposed ECSP Regulation has been amended.

    Read more.
  • European Commission Launches Consultations on Digitalization in the Financial Sector
    12/19/2019

    The European Commission has launched two consultations on digitalization in the financial sector. They form part of the EU’s new Digital Finance Strategy which aims to deepen the Single Market for digital financial services, promote a data-driven EU financial sector while addressing the risks inherent in that and enhance the digital operational resilience of the financial system. 

    Read more.
  • Financial Stability Board Publishes 2020 Work Program
    12/17/2019

    The Financial Stability Board has published its work program for 2020. The FSB confirms that it will continue to monitor developments to identify and manage new and emerging risks, work to finalize the outstanding components of the post-crisis reforms and assess the implementation of reforms as well as their effects. Key areas of focus will be:
    • LIBOR transition: the FSB will monitor implementation of the benchmark reforms and report on outstanding issues.
    • Global stablecoins: the FSB will launch a consultation on global stablecoins in April 2020.
    • Global payment systems: the FSB will work with other international bodies to develop and deliver a roadmap for using digital innovations to improve global cross-border payments.
    • FinTech: the FSB will report on the perspective of emerging market and developing economies.

    View the FSB work program for 2020.
  • UK Financial Policy Committee Highlights Risks of Open-Ended Funds and Global Stablecoins
    12/16/2019

    The Financial Policy Committee of the Bank of England has published its latest financial stability report. The report sets out the FPC's view of the resilience of the U.K. financial system and the main risks to the U.K.'s financial stability as well as the work being carried out to address those risks. The FPC states that the 2019 annual cyclical scenario stress test indicates that the U.K. banking system would be resilient to deep simultaneous U.K. and global recessions. Furthermore, the U.K. financial system is resilient to and prepared for any disruptions that may arise from a disorderly Brexit.

    Read more.
  • EU Expert Group on Regulatory Obstacles to Financial Innovation Publishes Recommendations on Regulatory Framework for FinTech
    12/13/2019

    The EU Expert Group on Regulatory Obstacles to Financial Innovation (or ROFIEG) has published a set of Recommendations and a Q&A on the establishment of an accommodative framework for FinTech in the EU. The ROFIEG was established by the European Commission in 2018 to provide expertise on technology in the financial services sector and, in particular, to review the EU’s legal and regulatory FinTech framework.

    Read more.
  • Committee on Payments and Market Infrastructures Publishes Report on Wholesale Digital Tokens
    12/12/2019

    The Committee on Payments and Market Infrastructures has published a report on wholesale digital tokens. The report focuses on how digital tokens might be used to effect settlement in wholesale transactions, replacing existing systems where such transactions are settled by updating balances in account records on a centralized register. The CPMI confirms that any wholesale digital token arrangement would need to comply with the applicable regulatory requirements, including, if the arrangement is systemically important, the Principles for Financial Market Infrastructure.

    Read more.
  • Financial Stability Board Publishes Reports on Implications of BigTech and Cloud Services
    12/09/2019

    The Financial Stability Board has published two reports on: (i) BigTech in finance and (ii) third-party dependencies on cloud services. The reports form part of the FSB’s ongoing work to analyze structural changes within the financial system in order to harness benefits and mitigate risks.

    Read more.
  • EU Statement on Stablecoins
    12/05/2019

    The Council of the European Union and the European Commission have published a joint statement on stablecoins. The statement reiterates many of the messages of the G7 working group paper on the impact of stablecoins. The EU statement confirms that no global stablecoin arrangement should begin to operate in the EU until the legal, regulatory and supervisory issues can be identified and dealt with appropriately. In the statement, the two EU bodies allude to the lack of information as a key impediment to global stablecoin arrangements being able to operate in the EU, in particular, because without it the authorities are unable to consider the impact on monetary policies or assess how to address other risks presented by this type of cryptoasset.

    View the EU statement on stablecoins.

    View details of the G7 working group paper on stablecoins.
  • European Central Bank Publishes Paper on Stablecoins
    11/28/2019

    The European Central Bank has published a paper providing an overview of the stablecoins market and looking ahead to its future development. The paper contains no binding rules or guidance and is designed for information purposes only. It outlines how stablecoins have emerged as an alternative to highly volatile cryptoassets, such as Bitcoin, by incorporating "stabilization" mechanisms that back the value of the stablecoins by tying them to underlying assets such as fiat currencies or commodities. Facebook's unveiling of its Libra stablecoin has attracted much attention from regulators, demonstrating the ongoing challenges faced by the cryptoassets. It goes on to describe the different types of stablecoins, the current status of stablecoin initiatives and considers potential use cases for stablecoins, such as transferring money without using financial institutions or cash. The ECB determines that it remains to be seen how the more innovative types of stablecoin will develop given their greater volatility and foresees that improvements in stablecoin governance may need to be made.

    Read more.
  • European Commission Publishes Report on Liability for Artificial Intelligence
    11/21/2019

    The New Technologies formation of the European Commission’s Expert Group on Liability and New Technologies has published a report on liability regimes for artificial intelligence. The report discusses existing laws concerning liability for emerging digital technologies and describes how those laws could be improved to cater for the new risks and challenges associated with new technologies. The New Technologies formation is a panel that was established by the European Commission in March 2018 and was asked to examine existing EU liability regimes and make recommendations for amendments to take account of emerging digital technologies where necessary.

    Read more.
  • Basel Committee Publishes Report on Open Banking and Application Programming Interfaces
    11/19/2019

    The Basel Committee on Banking Supervision has published a report on “open banking” and the use of application programming interfaces. The term “open banking” refers to the sharing and leveraging of customer-permissioned data by banks with third-party developers and firms to build applications and services, including for example those that provide real-time payments, greater financial transparency options for account holders, marketing and cross-selling opportunities. Application programming interfaces are software intermediaries that enable information to be exchanged between applications. 

    Read more.
  • UK Legal Statement on CryptoAssets and Smart Contracts
    11/18/2019

    The UK Jurisdiction Taskforce has published a legal statement on cryptoassets and smart contracts under English private law. UKJT is part of the LawTech Delivery Panel, an industry-led group established in 2018, with the aim of identifying barriers and opportunities for growth. The legal statement provides the UKJT's view of the principles applicable under English and Welsh private law for determining when a cryptoasset will be considered property and when an enforceable contract is concluded through a smart contract. The intention of the statement is to help improve confidence among market participants and investors due to the perception of legal uncertainty on the legal status of cryptoassets and smart contracts.

    Read more.
  • Financial Stability Board Plenary Meets to Review Global Financial System Vulnerabilities, FinTech and its 2020 Work Program
    11/07/2019

    The Financial Stability Board has met in Paris to review key issues facing financial markets, including vulnerabilities in the global financial system, FinTech developments and its 2020 work program. 

    Read more.
  • IOSCO Confirms That Stablecoins Are Potentially Within the Securities Regulatory Perimeter
    11/04/2019

    The International Organization of Securities Commissions has issued a statement confirming that it is possible, depending on their structure, for stablecoins to fall within the scope of securities market regulation. IOSCO has undertaken an in-depth study (not published) of stablecoins and has concluded that each proposed stablecoin, the manner in which it is intended to operate and the rights and obligations conferred on participants needs to be analyzed to assess the risks and benefits of the particular stablecoin. The statement is widely considered to be in response to Facebook's announcement about its proposed stablecoin, Libra. According to IOSCO, certain stablecoins may have features that are similar to securities and accordingly will be within the regulatory perimeter of some countries. IOSCO calls on entities that wish to launch stablecoins to engage with regulators so that any risks associated with the operation of the stablecoin might be mitigated.

    View IOSCO's statement.
    TOPICS: FinTechSecurities
  • G7 Working Group Reports on the Impact of Global Stablecoins
    10/18/2019

    The G7 working group on stablecoins has published a report investigating the impact of global stablecoins. The working group is comprised of senior officials from the G7 central banks, the International Monetary Fund, the Bank for International Settlements and the Financial Stability Board, and is chaired by Benoît Cœuré (Chair of the Committee on Payments and Market Infrastructures). 

    Read more.
  • Financial Stability Board to Assess Potential Risks of Stablecoins
    10/18/2019

    The Financial Stability Board has published a report on regulatory issues arising with respect to so-called stablecoins. The FSB defines a stablecoin as "a crypto-asset designed to maintain a stable value relative to another asset (typically a unit of currency or commodity) or a basket of assets" which may be "collateralised by fiat currency or commodities, or supported by algorithms".

    Read more.
  • Financial Stability Board Publishes Letter to G20 Ministers on Effect of Reforms and Future Work
    10/13/2019

    The Financial Stability Board has published a letter to G20 Finance Ministers and Central Bank Governors describing the progress of post-financial crisis reforms and key focus areas for the future. Over the past ten years, the FSB has proposed a number of reforms to the global financial system, working with international organizations on implementation to improve financial stability.

    Read more.
  • UK Financial Policy Committee Issues Summary of UK Financial System
    10/11/2019

    The U.K. Financial Policy Committee has issued a summary of the resilience of the U.K. financial system to potential economic shocks and the vulnerabilities it faces. The summary follows the FPC’s meeting on October 2, 2019, at which the FPC agreed on its intended policy action going forward. The FPC is made up of Bank of England staff, the Chief Executive of the U.K. Financial Conduct Authority and certain external members who work to identify, monitor and take action to remove or reduce systemic risks to the U.K. financial system.

    Read more.
  • European Banking Authority Publishes Strategic Focus Areas for 2020
    09/27/2019

    The European Banking Authority has published its 2020 Work Programme. The Programme details six strategic areas of focus for 2020 and these are:
     
    1. Support the development of the risk reduction package and the implementation of the global standards in the EU. The EBA will work on developing level 2 legislation required by the revised Capital Requirements Regulation and Directive, the revised Bank Recovery & Resolution Directive and the new Covered Bonds Directive and Investment Firm Regulation and related Directive (the latter two have not yet entered into force). The EBA will continue to work on the implementation of the market risk requirements, following the finalization of the Basel Committee on Banking Standard's fundamental review of the trading book (FRTB). In particular, in 2020, the EBA anticipates implementing the reporting requirement and certain aspects of the FRTB revisions for the internal model approach and for the treatment of non-trading book positions subject to FX or commodity risk. Another priority will be finalization of the EBA's roadmap for the internal ratings-based approach for calculating minimum capital requirements for credit risk.
    2. Providing efficient methodologies and tools for supervisory convergence and stress testing. The EBA intends to consult on Pillar 2 changes during 2020 and will conduct the 2020 stress test for EU banks.
    Read more.
  • International Organization of Securities Commissions Review of Suitability Requirements for Complex Products
    09/26/2019

    The International Organization of Securities Commissions has published a report, "Thematic Review on Suitability Requirements with respect to the Distribution of Complex Financial Products". The report summarizes the outcome of the review IOSCO undertook of a sample of member jurisdictions' implementation of the IOSCO 2013 Suitability Requirements for the Distribution of Complex Financial Products, which aims to prevent mis-selling of complex products. The Suitability requirements comprise nine principles relating to classification of customers, general duties regardless of customer classification, disclosure requirements, customers protections, incentives and enforcement.

    Read more.
  • US Court Rejects Suit Over Office of the Comptroller of the Currency FinTech Charter
    09/03/2019

    Judge Dabney Friedrich of the U.S. District Court for the District of Columbia has dismissed a lawsuit brought by the Conference of State Bank Supervisors (CSBS) that would have prevented the Office of the Comptroller of the Currency from offering a special purpose national bank charter to certain non-bank financial services firms. The CSBS brought the lawsuit in October 2018 following the OCC's July 2018 announcement that it would begin accepting applications for the FinTech charter, arguing that the OCC lacks the authority to award bank charters to non-depository institutions. However, Judge Friedrich concluded that the CSBS did not have standing to bring the suit given the fact that the OCC has yet to award a FinTech charter to any non-bank financial services firms.

    Read more.
    TOPIC: FinTech
  • UK Court Grants Asset Preservation Order over Bitcoin
    08/20/2019

    A U.K. court has granted an asset preservation order over Bitcoin stolen in a "spear phishing" attack on a major crypto-currency trader. The decision confirms that proprietary claims over Bitcoin constitute serious issues that should be tried in the courts. Although the presiding judges did not make a final ruling on the legal questions surrounding the nature of Bitcoin ownership, it is believed that this is the first time the English courts have considered the nature of crypto-currencies as property.

    Read more.
  • UK Regulator Provides Guidance on Regulatory Perimeter and Crypto-Assets
    07/31/2019

    The U.K. Financial Conduct Authority has published a Policy Statement and final Guidance on Crypto-assets. The Policy Statement summarizes the feedback received to the FCA's consultation on draft Guidance and sets out the FCA's response to that feedback. The final Guidance is, for the most part, the same as that on which the FCA consulted, except the FCA has made some drafting changes to provide further clarity and has added some guidance on stablecoins and airdrops. In addition, the FCA has revised the taxonomy by making a distinction between: (i) unregulated tokens, which are exchange tokens and utility tokens; and (ii) regulated tokens, which are security and e-money tokens.

    The Guidance is intended to clarify the FCA's expectations for firms carrying on crypto-asset activities within the U.K. by providing insight for market participants on whether certain crypto-assets are within the FCA's regulatory perimeter or are otherwise regulated. The FCA highlights that the Guidance should be used by firms to understand the regulatory status of their crypto-asset activities, but assessing whether a crypto-asset or related activity is within the regulatory perimeter can only be done on a case-by-case basis. Firms should also refer to the FCA's Perimeter Guidance Manual (PERG) in its Handbook, and where firms need further clarification, they should contact the FCA and/or obtain external legal advice.

    The Guidance provides an overview of the U.K. regulatory perimeter and discusses relevant concepts, such as "by way of business." It also refers to the territorial scope of the regulatory perimeter, referring to the detailed guidance in PERG and highlighting that where part of an activity is carried on outside the U.K., a firm may still be carrying on a regulated activity in the U.K.

    Read more
  • European Banking Authority Reports on Regulatory Perimeter, Regulatory Status and Authorization of Fintech Activities
    07/18/2019

    Fulfilling its mandate under the European Commission's FinTech Action Plan to map the current authorization and licensing approaches for innovative FinTech business models in Europe, the European Banking Authority has published a report on the regulatory perimeter, regulatory status and authorization of FinTech activities under its remit, in particular the banking, payment services and electronic money services sectors. The European Securities and Markets Authority published its related report on July 12, 2019.

    Read more.
  • European Securities and Markets Authority Publishes Report on the Licensing of FinTech Business Models
    07/12/2019

    Fulfilling its mandate under the European Commission's FinTech Action Plan to map the current authorization and licensing approaches for innovative FinTech business models in Europe, the European Securities and Markets Authority has published a report on the licensing of FinTech business models. The report sets out the key conclusions identified from the information collected from national regulators through two surveys that ESMA conducted in the last two years, and some of the actions that have been taken to address the emerging challenges. The report does not make any recommendations, but instead refers to previous advice and reports that make recommendations for an EU-level response to the issues.

    Read more.
    TOPICS: FinTechSecurities
  • US Regulators Clarify Position on Broker-Dealer Custody of Digital Asset Securities
    07/08/2019

    The U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority have issued a joint statement clarifying how their traditional regulatory approaches would apply to how broker-dealers handle their customers' digital asset securities and transactions. Specifically, the statement focuses on how certain SEC and FINRA rules apply to broker-dealers that wish to take custody of digital asset securities or perform other noncustodial activities involving such assets.

    The SEC and FINRA staffs (collectively, the "Staffs") said that a number of firms have applied to FINRA to engage in broker-activities involving digital asset securities, and a number of registered broker-dealers have also submitted applications to expand their businesses to include digital asset securities services. Many of these applications cover proposed business models that would involve the applicant taking custody of digital asset securities, while others would involve certain noncustodial activities.

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    TOPICS: FinTechSecurities
  • European Banking Authority Publishes Report on FinTech's Impact on Payment and Electronic Money Institutions' Business Models
    07/08/2019

    The European Banking Authority has published a report on the impact of financial technology on the business models of payment and electronic money institutions. The report aims to provide an overview of the current FinTech landscape and raise awareness of the main trends affecting business models. It follows major developments in the industry including the introduction of the revised Payment Services Directive (known as PSD2), the emergence of new market entrants offering innovative products and the growth of instant and mobile payment methods.

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