Asia Pacific Financial Services Regulatory Updates, Quarter Three 2020

The Deloitte Asia Pacific Centre for Regulatory Strategy is pleased to share with you the key regulatory updates from around our region for Q3 2020.

The first six months of 2020 have been extraordinarily challenging, and the impacts of the COVID-19 pandemic continue to be felt throughout the region. Our regulators and the industries they supervise have adjusted rapidly to these changing events – balancing the need to focus on COVID-19 response measures, and business as usual regulatory activities pre and post COVID-19. We note a key consideration across all regulators within our region has been the extent to which their regulatory activities support long-term economic recovery amidst a sharp deterioration in market outlooks and an uncertain recovery pathway and timeframe.

We have seen a continuing focus from regulators on operational resilience, risk and controls, corporate governance, and capital and liquidity stresses.  Further, we note that governments and regulators continue to prioritise supporting society through the economic disruption through the extension of measures such as income support payments (AU: JobKeeper), payment holidays (HK: Pre-approved Principal Payment Holiday Scheme), and special considerations for borrowers under stress due to COVID-19 (IND: Prudential Framework for Resolution of Stressed Assets), or the introduction of new measures to enhance access to liquidity facilities (SG), and ongoing adjustment of interest rates.

Despite the ongoing pandemic, we have more recently observed the gradual resumption of business as usual activities from regulators, as they look forward to navigating the post-COVID-19 environment.  For example, the Australian Treasury, as well as regulators like the Australian Prudential Regulatory Authority (APRA), the Australian Securities and Investments Commission (ASIC), and the Japan Financial Services Agency (JFSA) all released their Corporate Plan and Policy Priorities for 2020-21 and beyond during Q3 2020. These policy priorities outline actions they are taking to address the impact of the COVID-19 pandemic, as well as strategic priorities and activities to address longer term focus areas within their regulatory environment.  In Japan, Hong Kong Special Administrative Region (SAR), and China Mainland, there is continuing focus on LIBOR reform, following the UK Financial Conduct Authority’s confirmation that the end of 2021 remains the target date for discontinuation of LIBOR.  Pleasingly, we have also observed an increasing focus on the promotion of regulatory technology (Regtech) in our region, with regulators in Hong Kong SAR, Singapore, and South Korea all releasing regulatory updates or consultation papers promoting the use of technology applications across areas such as conduct risk management, anti-money laundering and counter terrorism financing (AML/CFT), and large volume digital financial transactions.

Whilst the bulk of regulatory activity continues to focus on ensuring financial stability, it appears regulators have started to adapt to this ‘new normal’, and there is an increasing expectation that institutions will be able to pivot and respond to changing supervisory priorities and requests at short notice – for example, regulatory requests for data collection relating to pandemic related transactions (e.g. AU: APRA Pandemic Data Collection, HK: impacts of COVID-19 on AML/CFT transaction monitoring and reporting). Importantly, the ‘new normal’ has not dimmed the spotlight regulators and society continue to shine on financial institutions conduct and the ‘social value’ they provide – with many regulators across the region engaging in enforcement activities following industry-wide reviews (AU), or releasing guidelines outlining expectations on the role and responsibilities, conduct and accountability of key management personnel (IN, SG, NZ).

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

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