Asia Pacific Financial Services Regulatory Updates, Q1 2020

The Deloitte Asia Pacific Centre for Regulatory Strategy is pleased to share with you the key regulatory updates from around our region for Q1 2020. 

The most impactful event this past quarter has of course been the spread of COVID-19 and the fall-out from the now global pandemic. It is therefore very natural that there has been a significant break between business as usual regulatory activities pre-COVID and post-COVID. This is particularly relevant for our own region, given that the impacts from COVID-19 were felt first here before spilling over to the rest of the world. You are able to see this abrupt break in each of the jurisdictions - while there are still some business as usual updates, the majority of regulatory activity this quarter is tied to COVID-19.

In light of this, both regulators and financial institutions have been making tough decisions about how to prioritise limited time in a volatile market. In the coming months financial institutions will need to focus on:

• Capital and liquidity stresses
• Operational resilience
• Risk and controls
• Supporting society through the economic disruption

Many planned initiatives and deadlines both locally and globally have also been deferred. For example, the Bank of International Settlements has announced a delay which pushes back Basel III implementation deadlines to 2023. Other programmes are still very much on-track, but with an eye to how the situation will develop An excellent example of this is the UK’s Financial Conduct Authority has announcement that the end of 2021 remains the target for the discontinuation of LIBOR, though interim deadlines that may be impacted by the virus.

We can see these trends closer to home where the bulk of regulatory attention has been focused on ensuring financial stability. In this vein, many jurisdictions have made adjustments to prudential standards or supervisory approaches while there are still some key areas of focus that remain on trend like data and technology. For example, both Singapore and Malaysia released updates on digital banks, Hong Kong SAR looked at algorithmic trading, while Indonesia and South Korea released financial technology strategies.

While there are changes to regulatory priorities, the ability to respond at short notice to supervisory requests will be key - for example, being able to deploy tactical scenario testing at short notice and having a well-developed set of early warning indicators is imperative. As well, regulators and wider society will be watching and wondering whether financial institutions can show their value as a social utility.

In light of this, the Deloitte Asia Pacific Centre for Regulatory Strategy has been tracking COVID-19 developments on a bi-weekly basis. The latest issue and archive can be found here.

For queries or more information on these updates, to subscribe to our COVID 19 updates, or other regulatory topics, please get in touch.