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.