Asia Pacific Financial Services Regulatory Updates, Quarter Four 2022

The Deloitte Asia Pacific Centre for Regulatory Strategy is pleased to share with you the key regulatory updates from our region for Q4 2022.

A year of global uncertainty: We are entering 2023 with many uncertainties, including inflationary pressures and potentially slower growth on the economic front, the next phase of the COVID-19 pandemic as more countries open up and new variants emerge, geopolitical flashpoints in the region and beyond, and our ability to deal with climate change. While addressing these challenges, financial regulatory agencies across Asia Pacific (AP) continue to take active measures to prepare their financial systems for the future.

Enhancing digital asset regulation: In the last quarter, key markets across AP, including Hong Kong SAR and Singapore, continue to reshape digital asset regulation after global crypto failures. Regulatory bodies have seen the proliferation of cryptocurrency trading platforms and offerings that have made trading easily accessible to consumers and have either introduced or are proposing additional consumer protection measures. These include enhanced disclosures, proper safeguarding of customer assets, reserving standards and naming conventions for stablecoins, sound money laundering controls, as well as robust technology and cybersecurity requirements. The aim is to develop responsible digital asset ecosystems that continue to be innovative and that have the potential to transform financial services.

Digital payments take a leap forward: New technology, business models and participants are providing more payment options and increased convenience for consumers. Authorities recognise the regulatory architecture governing payments needs to be updated and are pursuing agendas covering services such as digital wallets, buy-now-pay-later arrangements, stablecoins, and crypto-assets. Concurrently, central banks have launched more sandboxes for testing use cases for central bank digital currencies. They are also exploring greater cooperation on payment connectivity to support faster, cheaper, more transparent, and more inclusive cross-border small value payments, with a prime example being the memorandum of understanding entered into amongst five ASEAN central banks in November 2022.

Focus on climate and sustainability and the transition to green finance continues: Efforts to combat climate change have accelerated and intensified since the Paris Agreement. 2022 was a landmark year, which saw an unprecedented number of countries and corporates pledging net-zero commitments in the lead up to COP27. Sustainable finance can be a powerful enabler for an effective yet inclusive transition to net-zero. Financial institutions play an influential role in promoting sustainability and combating climate change by directing capital to sustainable projects. Best practices range from setting up robust governance frameworks for green and sustainable products (including proper due diligence) to working with clients to review their climate risks and develop holistic transition plans supported by green finance. Strengthened global co-operations will help by aligning regulatory standards as well as improving data comparability and availability.

Some delays in implementing Basel III Final Reforms: Both the Hong Kong Monetary Authority (HKMA) and Monetary Authority of Singapore (MAS) announced that they will delay implementation of the remaining Basel III reforms to no earlier than 1 January 2024 to give institutions more time to prepare. This also better aligns their implementation timelines with those of the Japan, EU, UK and US. In contrast, Australia has pushed ahead with implementation of the majority of reforms on 1 January 2023.

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