AP Financial Regulatory Update - Q1, 2020

Center for Regulatory Strategy Asia Pacific

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

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.

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