Asia Pacific Monthly Regulatory Update
The Asia Pacific Regulatory Update provides a summary of the key Asia Pacific and international regulatory developments affecting the Financial Services industry.
After a flood of releases from international authorities in July, there was a marked slowdown in August. While these predominantly European based organisations may have had a break for the summer, regulatory activity in Asia Pacific has continued at a high. India’s Household Finance Committee made a comprehensive set of recommendations for improved participation in financial markets, including new financial adviser and data protection frameworks. The Chinese government introduced new rules on outbound investments, while in Indonesia regulations were made to encourage infrastructure financing. The Australian government proposed legislation to establish a regulatory framework for the Asia Region Funds Passport and also outlined how it will progress consideration of an open banking regime. China and Australia took steps to bring the growing group of internet based lenders and other FinTechs within the prudential regulatory remit, while Japanese regulators identified how they would respond to impediments to market supervision bought about by technological innovation. A payments council was set up in Singapore as part of initiatives to develop e-payments, and regulators in the city state provided warnings on digital currencies. In Hong Kong and Australia the lists of acceptable regimes for substituted compliance with regards non-centrally cleared derivative margining rules were updated by regulatory authorities. The potential impacts of an ageing population was a theme for both Korean and Japanese supervisors. Malaysia’s central bank cited “values based intermediation” as a means to facilitate sustainable business practices, while Korea’s government chose to introduce laws that defer executive bonuses as a way of incentivising decisions for longer term sustainability. Regulators in Japan, New Zealand and Australia outlined their priorities for the upcoming year and beyond.
July saw a wave of international regulatory releases, as supranational bodies rushed to meet reporting deadlines ahead of the G20 Summit in Hamburg. Progress on the implementation of significant global reforms were reported on, covering matters such as Basel III, derivatives reform and shadow banking. Updates were also provided on work streams for compensation practices, misconduct risk and the decline in correspondent banking. In Asia Pacific, there were significant developments in recovery and resolution planning, notably the commencement of Hong Kong’s resolution regime. Australian regulators announced how they intend to ensure banks have “unquestionably strong capital ratios”, while New Zealand issued a consultation on the types of financial instruments that should qualify as capital. Conduct and culture continued to be on the regulatory radar, with Japan publishing a list of companies that have adopted policies to implement the principles for customer oriented business, and Singapore’s regulator also urging financial advisory firms to put the customer at the centre. The Chinese government announced a cabinet-level committee to coordinate oversight of the financial services industry, Korean regulators continued to harbour concerns about household loans extended by banks, and in Thailand new controls on credit cards and unsecured personal loans were imposed.
June saw an acceleration in the pace of financial services regulatory activity. Internationally, bodies were busy in the lead up to the G20 Summit releasing consultations, guidance and reports. The financial stability risks posed by FinTech, compensation tools to address misconduct, financial disclosure related to climate change and stress testing of central counterparties were some of the issues that were covered and that will, in due course, influence regulatory thinking in our region. In Asia Pacific, there is a continued focus on the themes of governance, supervision and technology, and individual reforms can be seen in this context. During the month, regulators in the region talked about “front loaded” and “pre-emptive” supervision. The importance of good conduct, fair treatment of customers and positive consumer outcomes was also underscored. Strengthening the asset management industry was another theme, Further consultations on regulatory approaches to robo-advice were issued and numerous FinTech cooperation bridges built across borders. More detail about some of the key international and regional regulatory developments during June can be found in regulatory update.