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AP Financial Regulatory Update 

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 Q3 2019.

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The Deloitte Asia Pacific Centre for Regulatory Strategy is delighted to share with you the key regulatory updates from around our region from Q3 2019.

In Japan, Japan Financial Services Agency released “Policy Assessment and Strategic Priority in 2019”, in August, where they prioritize “Finance Digitalization Strategy”, “Financial services to accommodate various needs”, and “Financial intermediation stability” as their initiatives. In other area of AP, Technology and cyber resilience (Australia, Malaysia, New Zealand, Singapore), money laundering and terrorist financing risks (Hong Kong SAR, India), as well as culture and conduct (Australia, New Zealand, Taiwan, Japan) continue to be the key focus areas for Asian regulators this quarter.
For queries or more information on these updates or other regulatory topics, please get in touch.

 

Shiro Katsufuji, SEA ACRS Co-lead
Best Regards,
 

Japan

This quarter, there were several developments in the regulatory landscape in Japan. Last year, the Japan Financial Services Agency (JFSA) undertook a material organisation change. This development is in line with JFSA’s recent supervisory direction, moving from a “checkbox” type inspection model towards more effective supervision based on dialogue with financial institutions. This August, the JSFA released their Policy Assessment and Strategic Priorities 2019. The document is annual report by the JFSA that includes their strategic plan for financial industry supervision for the coming year – Japanese companies always pay close attention to its contents. In the 2019 document, the JFSA emphasises three initiatives, “digitalization”, “oriented business conduct”, and financial stability. For the third priority, they refer to the “conversion of credit cycles”, where the JFSA plans to focus on several points including monitoring of CLOs, leveraged loans, and the use of stress testing.

In LIBOR transition, there have been some remarkable promotion by regulators to improve the private sectors’ preparation for the transition. The Bank of Japan (BoJ) and the JFSA are increasingly active in promoting the actions by the market participants to prepare for the possible discontinuation of LIBOR.

The BoJ’s Cross-Industry Committee on Japanese Yen Interest Rate Benchmarks released consultation on the JPY LIBOR transition. The consultation period is until the end of September, and the Committee plans to finalize the document sometime this autumn. This will accelerate the preparation for LIBOR transition by Japanese firms. Mr. Morita, Director-General of the Strategy Development and Management Bureau at the JFSA, appeared at the Benchmark Reform Forum by BoJ, and emphasized the necessity of actions by the market participants.

Though there is uncertainty as to what would be the alternative rate for JPY LIBOR (as Japan advocates a “multiple rate approach” as adopted by the other AP jurisdictions) as the preparation is expected to be accelerated in collaboration amongst the public sector and private sector.

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