Global Regulator & Central Bank News Roundup

Volume 25/2024 (June 17 – June 23)


Your weekly summary of key regulatory updates in an objective bite-size format, drawing on official news and press releases from 700+ financial services regulators, central banks as well as global and regional standard setters. For more current updates, visit Regxplora, Regxelerator’s end-to-end automated and generative AI-powered financial regulatory intelligence platform. Sign up here to receive the roundup via email.

Themes covered in this edition


Prudential & financial stability
EBA Publishes Q1 2024 EU/EEA Banking Sector Risk Dashboard
The European Banking Authority (EBA) has released its quarterly Risk Dashboard for Q1 2024. The latest data indicates that EU/EEA banks have sustained a robust profitability profile, with a return on equity (RoE) of 10.6% and an expansion in net interest margins to 1.69%, while anticipating a slowdown in profits in the next 6-12 months due to interest rate cuts. Banks’ capital positions and liquidity positions, too, continued to remain stable with a CET1 ratio of 15.9% (unchanged), a net stable funding ratio (NSFR) of 127.2% (up from 126.9% in Q4 2023) and a liquidity coverage ratio of 161.4% (down from 168.3% in Q4 2023). Despite the overall sound position, concerns are emerging due to a significant increase in non-performing loans by 2% quarter on quarter, significantly driven by the SME segment. In terms of operational risks, data indicates an upwards trends in the number of (successful) cyber-attacks including an increase in their level of sophistication.


U.S. OCC Spring 2024 Semiannual Risk Perspective Highlights Credit, Market, and Operational Challenges in Federal Banking System
The Office of the Comptroller of the Currency (OCC) has released its Semiannual Risk Perspective for Spring 2024, providing insights into the federal banking system’s condition and identifying key risks. Despite the overall soundness of the system, the report highlights risks in four key areas. This includes an increasing credit risk profile, notably driven by commercial real estate sectors such as office and multifamily properties, which face challenges from rising rates and structural shifts, as well as consumer financial stress due to persistent inflation and high interest rates potentially impacting consumption growth. In terms of market risk, the report notes that while net interest margins (NIMs) face pressure from intense deposit competition and elevated funding costs, these pressures may have reached their peak. This notwithstanding uncertainties in rate changes and depositor behaviors coupled with growing wholesale funding and lingering unrealized losses in investment portfolios due to high interest rates pose ongoing risk management challenges. Besides these, the reports also points to challenges in relation to operational and compliance risks, reiterating the challenges associated with growing cyber threats, rapid digitalization, innovative financial products, and extensive third-party engagements as well as evolving customer preferences and persistent fraud risks and the implications for compliance risk management.


Singapore Releases Updated National Money Laundering Risk Assessment
The Monetary Authority of Singapore (MAS), alongside the Ministry of Finance of Singapore and the Ministry of Home Affairs, has released an updated money laundering National Risk Assessment, which identifies the primary money laundering threats facing the country. The latest Assessment establishes fraud, notably foreign and domestic cyber-enabled fraud, carried out by international criminal syndicates as well as other foreign predicate crimes such as organized crime, corruption, tax crimes and trade-based money laundering as the core money laundering threats. From a sectorial perspective, the Assessment identifies the banking sector, especially wealth management services, as facing the greatest risk exposure due to significant transaction volumes and diverse customer profiles while also drawing attention to corporate service providers within the Designated Non-Financial Businesses and Professions sectors for their elevated risk stemming from company incorporation services. Furthermore, with an increase in incidents involving digital payment token service providers, these entities are being closely monitored for vulnerabilities that could be exploited for illicit purposes. The findings will continue to inform Singapore’s including the MAS’ risk-based approach to money laundering supervision and enforcement as well as its engagement and awareness activities with entities in addition to other strategic initiatives such as the COSMIC platform to facilitate sharing of money laundering information and cases among Singapore-based banks.


Conduct & consumer protection
HKMA Endorses Revised Telemarketing Code for Banks To Enhance Consumer Protection
The Hong Kong Monetary Authority (HKMA) in a new statement has expressed its support for the revised Code of Practice on Person-to-Person Marketing Calls, introduced by the Hong Kong Association of Banks (HKAB) and the Hong Kong Association of Restricted Licence Banks and Deposit-Taking Companies (DTCA). Effective immediately, the updated Code introduces a cap on marketing calls to the same telephone number at three per week to enhance consumer telemarketing experiences. It further provides detailed guidance for Authorized Institutions (AIs) on consumer protection during telemarketing activities, which includes setting permissible call hours from 9:00 am to 10:00 pm, clarifying caller identity and purpose, efficiently processing unsubscription requests, prudent management of information collection and follow-up meetings, as well as implementing effective complaint handling procedures. Excluded from the frequency cap are so-called “warm calls” where an existing customer relationship is in place.


UK FCA Study Highlights Impact of Digital Engagement Practices on Trading Behavior and Risks
The Financial Conduct Authority (FCA) has released findings from an innovative online experiment involving over 9,000 consumers to evaluate the effects of digital engagement practices (DEPs) on trading behaviors. Results from the study, which was conducted through an experimental trading app, highlight that DEPs like push notifications and prize-linked points increased trading frequency by 11% and 12% respectively, as well as also increased the proportion of trades in risk investments by 8% and 6% respectively. Additionally, the study highlighted differences in impact of DEPs by types of user groups, with a larger impact on trading activity observed on individuals with low financial literacy as well as women and younger participants aged 18-34. In terms of trading outcomes, the study findings indicated that there was no significant difference in the amount of money left uninvested or trading earnings among different DEP treatments, indicating that while DEPs affect behavior, they do not necessarily impact final financial outcomes within the scope of this experiment. Commenting on the findings, the FCA reiterated the necessity for trading apps to be designed and tested to meet consumer needs, facilitate informed investment decisions and healthy financial behaviors, and importantly to avoid exploiting consumer bias and prompt unnecessary risk-taking.


Fintech & ecosystem innovation
EBA Issues Final Set of Technical Standards and Guidelines under MiCAR
The European Banking Authority (EBA) has released a further set of four technical standards and guidelines under the Markets in Crypto-Assets Regulation (MiCAR). These include: (1) The final draft Regulatory Technical Standards (RTS) on the use of asset-referenced tokens (ARTs) and electronic money tokens (EMTs) denominated in a non-EU currency as a means of exchange, which outlines the standards for estimating transaction numbers and values in non-EU currencies.; (2) the final draft Implementing Technical Standards, which set forth reporting obligations for issuers of ARTs, EMTs denominated in a non-EU currency, and crypto-asset service providers (CASPs), complete with templates and instructions to ensure compliance with MiCAR’s reporting requirements.; (3) Guidelines on liquidity stress testing which specify the risks and reference parameters for stress test scenarios that issuers must incorporate into their liquidity stress tests.; and (4) the final draft RTS on supervisory colleges which establish criteria for identifying “most relevant” entities within their categories and conditions that determine when ARTs or EMTs are “used at large scale,” affecting the composition of supervisory colleges as mandated by MiCAR. The release marks the EBA’s completion of delivery of technical standards under MiCAR.


European Commission Launches Consultation on AI in the Financial Services Sector
The European Commission has launched a targeted consultation to explore the use and impact of artificial intelligence (AI) in the European financial sector with a view to informing its assessment of the market developments and risks posed by the AI and the implications for the implementation of the forthcoming AI Act. The consultation comprises three sets of questions: (1) General questions on AI applications in financial services, investigating current and anticipated use of AI alongside other aspects such as benefits, challenges and risks associated with AI as well as considerations on the impact of business models, compliance burden and the role of data access in developing AI applications.; (2) Questions focused on specific financial services use cases addressing the application of AI across different sectors in including banking and payments, market infrastructure, securities markets, insurance and pensions, and asset management and the specific opportunities, challenges, barriers to development.; (3) Questions focused on the AI Act with a particular focus on high-risk AI use cases and the need for further specific guidance for financial services firms to support the implementation and compliance with the AI framework. Input into the consultation can be provided until 13 September.


Swedish Finansinspektionen Opts Against Regulatory Sandbox Creation
In a new statement and short report the Swedish Finansinspektionen (FI) has expressed its position against the creation of a dedicated regulatory sandbox in addition to its existing innovation centre. Despite observing that 40% of EU financial supervisory authorities have adopted regulatory sandboxes and despite an increasing focus on financial innovation, the FI maintains that a national sandbox is unnecessary. FI’s decision has been influence by multiple factors. It argues that its Innovation Center, established in 2017 to offer guidance and support to companies with innovative financial services, provides similar benefits to what a sandbox would offer, while furthermore raising various concerns over sandboxes. Specifically, according to the FI, there is limited evidence from international experiences, such as evidenced by IMF assessments, that regulatory sandboxes contribute to meaningful policy changes or have a significant impact on the market as well as no compelling cost-benefit justification. Additionally, the it raises concerns over fairness and market distortion, noting that a sandbox typically involves selective treatment where only certain businesses, leading to risk of perceived favoritism or unfair competitive advantages. In light of its position, the FI stressed that it will continue to review how to strengthen its approach under the innovation centre and work collaboratively with market participants to identify areas benefiting from additional guidance.


NGFS Updates Climate-Related Disclosure Guide for Central Banks with Enhanced Metrics and Targets
The Network for Greening the Financial System (NGFS) has released an updated Guide on climate-related disclosure for central banks. The revised Guide, which builds on the initial 2021 edition, stresses the critical role of central banks in modeling exemplary risk management by transparently disclosing their climate-related risks and opportunities. It is structured to align with the Task Force on Climate-related Financial Disclosures (TCFD)’s four thematic pillars – Governance, Strategy, Risk Management, and Metrics and Targets – provides a spectrum of disclosure recommendations, from foundational to advanced, to suit the varied contexts of central banks globally. A key enhancement in the latest edition is the inclusion of a dedicated chapter on metrics and targets, which draws from the NGFS’ initiatives on sustainable investment. Additionally, it offers further guidance on the disclosure of internal operations via insights from its subgroup dedicated to greening central banks’ corporate practices as well as the disclosure on institutional functions such as monetary policy, supervision and financial stability. The detailed summary of the revised Guide can be accessed here.


IAA Issues Guidance on Integrating Climate-Related Risks into Social Security Actuarial Practices
The International Actuarial Association (IAA) has published a new paper entitled “Actuarial Considerations Around Climate-Related Risks on Social Security.” This document, prepared by the IAA’s Climate Risk Task Force in partnership with the International Social Security Association (ISSA), examines the complex effects of climate-related risks on social security systems. It highlights the necessity for actuaries to incorporate these risks into their analyses and identifies essential assumption classes for actuarial projections. The paper also presents methods for integrating climate scenarios into economic and financial evaluations to support informed decision-making. Emphasizing both qualitative and quantitative analysis, it provides insights into potential future uncertainties and opportunities, aiming to strengthen the resilience of social security programs. This work is part of the IAA’s continued climate change capacity building efforts.


Australian Government Publishes Final Sustainable Finance Roadmap
The Australian Government has published the final version of its Sustainable Finance Roadmap, which sets out the country’s strategic vision for the implementation of sustainable finance reforms. The Roadmap is structured around three main pillars: (1) enhancing transparency on climate and sustainability, (2) strengthening financial system capabilities, and (3) reinforcing government leadership and engagement. Key initiatives include mandatory climate-related financial disclosures, the development of an Australian Sustainable Finance Taxonomy, and issuing sovereign green bonds. These efforts will be supported by a series of steps to improve market supervision, address systemic financial risks, and confront data and analytical challenges. Additionally, the Roadmap incorporates strategies for international collaboration to align global standards and promote high-quality, interoperable frameworks. The Roadmap includes a high-level integrated timeline for the implementation of key initiatives.


ESAs Issue Joint Opinion on Enhancing SFDR Framework with Proposed Labels and Sustainability Indicator
The European Supervisory Authorities (ESAs) have jointly issued an Opinion aimed at refining the Sustainable Finance Disclosure Regulation (SFDR) framework. Most notably, the ESAs suggest streamlining financial product categorization by introducing two voluntary labels: “sustainable” and “transition.” The proposed change is intended to enhance consumer clarity regarding product objectives and mitigate the risk of greenwashing. Furthermore, they advocate for the European Commission to explore the creation of a sustainability indicator that would facilitate the grading of various financial products, including investment funds, life insurance policies, and pension products. Specifically, the indicator seeks to provide investors with a clear, easily understandable representation of a product’s sustainability features, expressed through a scale or grading system that categorizes products based on their environmental and social sustainability impacts. The Opinion also includes recommendations for refinements in other areas including but not limited to amendments to the definition of sustainable investments and simplification of investor disclosure.


Bank of France and ACPR Issue New Integrated Sustainability Report
The Bank of France and the ACPR have released their first Sustainability Report, which provides a detailed account of their sustainability efforts and strategies and consolidated information from previously separate reports into a single integrated one. The new report is structured into two principal sections: the first section presents the sustainable actions undertaken by both entities, while the second part describes the Bank of France’s approach to responsible investment. The new edition expands its focus to encompass not only financial risks related to climate change but also those associated with nature, such as biodiversity loss. Activity highlights from the past year include the integration of climate and nature-related considerations into operational practices, execution of a climate stress test within the insurance sector, development of a climate indicator for non-financial corporations, co-leadership in NGFS activities on nature-related risks, oversight of sustainability risk compliance pursuant to Article 29 of the Energy-Climate Law, initiatives to educate employees on climate issues affecting financial stability, achievement of a 25.6% reduction in greenhouse gas emissions relative to 2019 levels, and an evaluation of biodiversity impact. In advancing its responsible investment strategy, the Banque de France has also broadened its reporting to include assets denominated in foreign currencies and enhanced metrics through participation in a Eurosystem Central Banks’ collective exercise. It has further obtained certification for key climate metrics from Statutory Auditors and adjusted equity portfolios to align with a sub-1.5°C global warming trajectory ahead of target timelines while strengthening sectoral exclusions.


Other transversal themes
APRA Launches Integrated Digital Prudential Handbook to Streamline Regulatory Guidance
The Australian Prudential Regulation Authority (APRA) has announced the launch of its new digital prudential handbook. The handbook seeks to serve as a one-stop resource digital resource, consolidating APRA’s prudential standards, guidance and supporting materials and thereby aiding entities in managing their compliance obligations. The launch forms part of APRA’s long-term strategic initiative to modernize its prudential architecture with a view to making it more accessible, understandable and adaptable to stakeholders across regulated industries and the broader community. Under the handbook, prudential standards are grouped into six pillars: governance, risk management, financial resilience (applicable only to banking and insurance), Business Operations (applicable only to superannuation), and recovery and resolution, and reporting. Each pillar is subdivided into core and supporting standards and guidance, which delineate foundational requirements and detailed risk management strategies pertinent to specific industries. The initial version of the handbook is planned to undergo further refinement based on industry feedback, with upcoming industry roundtables planned for early July and a final version expected by the end of July.


FINMA Clears UBS-Credit Suisse Merger Without Conditions Following Antitrust Review
The Swiss Financial Market Supervisory Authority (FINMA) has concluded the antitrust control procedure for the UBS and Credit Suisse merger without imposing conditions or obligations. FINMA’s decision, which followed an advanced approval on 19 March 2023 under the Cartel Act, was informed by comprehensive market analyses. These evaluations showed that effective competition would remain intact across all market segments, although UBS’s position in certain sub-segments would be strengthened. Unlike typical assessments led by the Competition Commission (COMCO), FINMA took charge of this review to prioritize creditor protection and safeguard against potential risks to the Swiss financial center and international markets. Throughout the process, FINMA collaborated with COMCO, benefiting from its support and expertise through joint market surveys and analysis of feedback from various stakeholders including competitors, associations, and customers. With this special responsibility under the Cartel Act now complete, FINMA has ensured transparency by publishing both its ruling and COMCO’s detailed opinion. Looking ahead, FINMA will continue to closely monitor the regulatory aspects of Credit Suisse’s integration into UBS.


CSA Introduces Initiative to Enhance Capital Formation for Early-Stage Firms via EMD Participation in Prospectus Offerings
The Canadian Securities Administrators (CSA) has announced a new initiative aimed at improving capital-raising opportunities for early-stage businesses by allowing Exempt Market Dealers (EMDs) to participate in prospectus offerings. This collaborative effort, which includes the Ontario Securities Commission, Autorité des marchés financiers, B.C. Securities Commission, Financial and Consumer Affairs Authority of Saskatchewan, Alberta Securities Commission, and Nova Scotia Securities Commission, seeks to address the current restrictions that limit EMDs’ involvement as their business clients expand. Currently, EMDs – which role involves assisting early-stage businesses raise capital by distributing their securities under prospectus requirement exemptions – are not permitted to remain involved as businesses grow and opt for financing via prospectus offerings. A new time-limited exemption seeks to overcome this limitation and enable EMDs to continue supporting issuers by facilitating access to additional capital throughout the participating provinces. The initiative builds on other provincial efforts to support the growth and modernization of capital markets.


U.S. FDIC Creates Two Independent Offices in Response to Workplace Conduct Issues
The Federal Deposit Insurance Corporation (FDIC) has established two new independent offices, the Office of Professional Conduct (OPC) and the Office of Equal Employment Opportunity (OEEO), to enhance its approach to workplace conduct issues. The OPC will handle complaints related to harassment and interpersonal misconduct with a view to ensuring adherence to the FDIC’s anti-harassment and anti-retaliation policies while the OEEO will concentrate on discrimination cases in line with laws enforced by the Equal Employment Opportunity Commission. Both offices will operate autonomously and under direct supervision of the FDIC Board of Directors.


CFTC Awards Over $8 Million to Whistleblower for Key Role in Derivatives Market Enforcement Actions
The Commodity Futures Trading Commission (CFTC) has granted an award exceeding $8 million to a whistleblower whose critical information spurred enforcement actions by the CFTC and other regulatory bodies against malpractices in the derivatives market. The whistleblower provided pivotal evidence of deceptive conduct by market participants, which significantly aided in streamlining the investigation and subsequent legal proceedings by not only strengtheningthe case but also conserving resources during the investigation. The awarded sum falls within the legally prescribed range of 10 to 30 percent of monetary sanctions collected. As part of the CFTC’s Whistleblower Program approximately $380 million has been awarded to date, correlating with enforcement actions that have resulted in over $3.2 billion in sanctions. The awards are financed through penalties paid by violators into a Customer Protection Fund, which ensures that there is no financial impact on aggrieved customers.


Leadership changes
National Bank of Denmark Names Ulrik Nødgaard as new Governor Effective August
The National Bank of Denmark has appointed Ulrik Nødgaard as the new Governor and member of the Board of Governors, with his term commencing on 15 August 2024. Nødgaard has an extensive background in macroeconomics, financial sector regulation, and payment infrastructure. His prior positions include leadership roles as CEO of Finans Danmark, Director General of the Danish Financial Supervisory Authority, and Director at the Ministry of Economic and Business Affairs. He takes over from Per Callesen who will be moving to a project position at the University of Copenhagen in collaboration with Danmarks Nationalbank starting 1 September 2024. Nødgaard will serve alongside Christian Kettel Thomsen and Signe Krogstrup on the Board of Governors.


Cross-border cooperation
MAS and NBC Launch Financial Transparency Corridor to Facilitate SME Trade Finance
The Monetary Authority of Singapore (MAS) and the National Bank of Cambodia (NBC) have jointly launched the Financial Transparency Corridor (FTC), a digital platform aimed at enhancing trade and financial services for small and medium-sized enterprises (SMEs) in both countries. The FTC facilitates consent-based data sharing between financial institutions, thereby improving credit risk assessments and access to financing for SME trade. A total of 8 financial srevices firms from Singapore and Cambodia are among the inaugural participants. In the future, the FTC plans to broaden its network of participating financial institutions and explore additional areas including green finance and trade finance. The collaboration is supported by a Memorandum of Understanding signed in July 2023 which seeks to improve cross-border finance access for SMEs and foster sustainable economic growth through enhanced financial trust data exchange.


MAS and CSRC Enhance Supervisory Cooperation and Discuss Cross-Border Capital Market Collaborations at Annual Roundtable
During their 8th annual bilateral roundtable, the Monetary Authority of Singapore (MAS) and the China Securities Regulatory Commission (CSRC) reaffirmed their commitment to supervisory cooperation. Co-chaired by Ms. Ho Hern Shin, MAS’ Deputy Managing Director (Financial Supervision), and Mr. Chen Huaping, CSRC’s Vice Chairman, the meeting focused on enhancing regulatory frameworks for securities offerings and listings, sustainability disclosure requirements for listed companies, and the oversight of derivatives markets. The roundtable also provided an opportunity to discuss potential collaborations between Singaporean and Chinese exchanges to support cross-border capital market activities, including index collaboration. Ms. Ho highlighted the importance of these annual discussions in strengthening ties between MAS and CSRC and looked forward to increased connectivity and participation among financial institutions from both nations.


NSSMC and BaFin Enter Administrative Partnership to Advance Ukrainian Financial Regulation Alignment with EU Standards
The National Securities and Stock Market Commission (NSSMC) of Ukraine and the German Financial Supervisory Authority (BaFin) solidified their commitment to enhance financial regulation and supervision through the signing of a memorandum of administrative partnership. BaFin President Mark Branson and NSSMC Chairman Ruslan Magomedov formalized this collaboration, which is set to support the integration of European legislative standards into Ukrainian law—a key step as Ukraine considers EU accession. The ceremony, which also included a training session for NSSMC representatives, highlighted the mutual dedication to a long-term partnership. In the coming months, the cooperation will feature joint webinars covering specialized topics such as investment fund regulation in Europe, compliance with directives like UCITSD, AIFMD, MiCAR, and management of pensions, bonds, and virtual assets.