Asia Pacific Financial Services Regulatory Updates, Quarter Three 2022

The Deloitte Asia Pacific Centre for Regulatory Strategy is pleased to share with you the key regulatory updates from our region for Q3 2022.

Continued reform and enhancement of prudential regulation in both the banking and insurance sectors: Updates to prudential regulation continue. In the last quarter, Australia’s prudential regulator published their supervisory plan for 2022-2023. Its key priority remains preserving the resilience of financial institutions and aims to modernise its prudential architecture and strengthen cyber resilience. Australia’s prudential regulator also consulted on a new cross-industry prudential standard on operational risk management, which aims to strengthen operational risk management and the overall resilience of financial institutions. Prudential guides on financial contingency planning and resolution planning are also under consultation. The objective of these guides are to ensure that financial institutions are prepared for, and able to resolve disruptions.

A proposed regulatory framework on technology risk management for consultation has been released in Malaysia. The proposed framework covers requirements for governance, technology risk management, technology operations and cybersecurity. The framework is expected to be integrated into current guidelines on cyber and technology risks. In China Mainland, rules on the assessment methodology for systemically important insurance companies are under consultation. The rules aim to improve the regulatory framework for insurance entities in China Mainland and look to establish a framework for the assessment of systemically important insurers domestically.

Regulators and central banks actively support economic recovery through incentivisation, while controlling risks arising from capital markets: Supporting economic recovery remains to be a critical agenda item for central banks and regulators. Over the last quarter, regulations were amended in Indonesia to encourage banks to provide funds to priority sectors to promote economic activity. These sectors include those that are resilient to economic pressures, drive economic growth and support economic recovery, expanding the number of priority sub-sectors to 46. Measures were announced in South Korea to ensure the stability of people’s livelihood through the provision of financial support to alleviate burdens on vulnerable groups including lower income households and small merchants. These measures also include a financial support program tailored to the needs of small businesses with the aim of providing liquidity support and increasing competitiveness.

Enhanced regulation on payment systems, cloud, buy now pay later, and other digital activities: Ensuring the resilience of payment systems is crucial as incidents have the potential to adversely impact the stability of broader financial systems and/or national economies. Over the last quarter, a letter was released in Hong Kong SAR on sound practices for payment operations of authorised financial institutions to ensure the capacity to implement robust operational resilience measures for payment processes. Based on the prevalence of incidents attributed to IT system malfunctions, these sound practices included a focus on the prevention of operational incidents, monitoring and business continuity planning: (i) to prevent payment-related operational incidents by, e.g., testing the new or enhanced systems before they go live, (ii) to monitor payment operations closely through, e.g., establishing a dedicated team responsible for ongoing monitoring and (iii) to have robust business continuity planning.

New regulation on payment system operations for payment service providers and payment system infrastructure operators have been released in Indonesia. Its objective is to balance efforts to maintain the stability and reliability of payment system. A series of guidelines were issued in Malaysia for payment systems. These guidelines included payments and securities services governance framework participation rules, operational procedure and process requirements for security services and operational procedures for settlement in the Real Time Electronic Transfer of Funds and Securities System.

For queries or more information on these updates or other regulatory topics, please get in touch.