This newsletter covers some of the more recent regulatory changes impacting Banking, Capital Markets, Insurance, Energy, Utilities, Life Sciences, Communications & Media and Software & Platforms firms. We track more than 100 regulatory and industry bodies across North America, Europe and Asia Pacific. The shortlisted entries highlight the risks covered and business processes affected by the regulatory reforms.

CURRENT REGULATIONS:

Monetary Authority of Singapore (MAS):
MAS commits $42m to spur adoption of technology solutions for risk management and regulatory compliance
Publication Date: April 30th 2021

Risks Covered: Operational Risk
Business Processes Impacted: Business Continuity Management
The agency has announced a new Regulatory Technology (RegTech) grant scheme and an enhancement of the Digital Acceleration Grant (DAG) scheme to accelerate technology adoption in the financial sector.1

European Banking Authority (EBA):
Consultation paper on draft RTS concerning the assessment of appropriateness of risk weights and minimum LGD values
Publication Date: April 29th 2021

Risks Covered: Credit Risk
Business Processes Impacted: Netting & Collateral Management
The agency has published a consultation paper on the assessment of the appropriateness of risk weights and minimum LGD values.2

Business Insider:
APRA has doubled down on its climate warnings, urging the business community to take stock of the ‘unprecented’ risks
Publication Date: April 28th 2021
Risks Covered: Climate Risk
Business Processes Impacted: Risk Management & Stress Testing
Australia’s business community faces enormous risks if it remains ignorant to the impacts of climate change, APRA says. The prudential regulator doubled down on its warnings on Wednesday as chair Wayne Byres addressed the Committee for the Economic Development of Australia. Byres championed APRA’s new pilot climate vulnerability assessment, which /would/could help Australia’s big banks assess their exposure.3

European Commission (EC):
Medical devices – online manuals replacing paper instructions
Publication Date: April 28th 2021
Risks Covered: Operational Risk
Business Processes Impacted: Consumer/Investor Protection
To /facilitate/confirm the smooth implementation of the new regulatory framework for medical devices (Regulation (EU) 207/2012), economic operators are now allowed to provide online manuals instead of paper instructions for certain device categories. The new implementing regulation expands the scope of the Regulation to include medical device software.4

Australian Prudential Regulation Authority (APRA):
APRA releases guidance on managing the financial risks of climate change
Publication Date: April 23rd 2021
Risks Covered: Climate Risk
Business Processes Impacted: Climate Change
The authority has released for consultation its draft guidance to banks, insurers and superannuation trustees on managing the financial risks of climate change.5

European Commission (EC):
Commission Implementing Decision (EU) 2021/611 of 14 April 2021 amending Implementing Decision (EU) 2020/438 as regards harmonised standards on biological evaluation of medical devices, packaging for terminally sterilised medical devices, sterilisation of health care products and clinical investigation of medical devices for human subjects
Publication Date: April 20th 2021
Risks Covered: Operational Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has published a set of decisions on harmonised standards on medical devices, packaging for terminally sterilised medical devices, sterilisation of health care products and clinical investigation of medical devices for human subjects.6

European Central Bank (ECB):
Eurosystem report on the public consultation on a digital euro
Publication Date: April 15th 2021
Risks Covered: Cyber Security Risk
Business Processes Impacted: Information Technology
The agency has published the results of its public consultation on a digital euro.7

Office of the Superintendent of Financial Institutions (OSFI):
OSFI launches consultation on enhanced assurance expectations
Publication Date: April 13th 2021
Risks Covered: Operational risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The agency has launched a ten-week consultation with the publication of a discussion paper, Assurance on Capital, Leverage and Liquidity Returns for federally regulated insurers and deposit-taking institutions. The paper focuses on enhancing and aligning assurance expectations given the increasing complexity arising from the evolving regulatory reporting framework, particularly changes resulting from International Financial Reporting.8

European Central Bank (ECB):
How effective is the EU Money Market Fund Regulation? Lessons from the COVID 19 turmoil
Publication Date: April 13th 2021
Risks Covered: Market Risk
Business Processes Impacted: Business Continuity Management
This article assesses the effectiveness of the EU’s regulatory framework from a financial stability perspective and identifies three important lessons. First, investment in non-public debt assets exposes MMFs to liquidity risk, highlighting the need to limit investment in illiquid assets. Second, low-volatility net asset value (LVNAV) funds are particularly vulnerable to liquidity shocks, given that they invest in non-public debt assets while offering a stable net asset value (NAV). Enhanced portfolio requirements could strengthen their liquidity profile. And third, MMFs seem reluctant to draw down on their liquidity buffers during periods of stress, suggesting a need to make buffers more usable.9

European Banking Authority (EBA):
EBA GL 2019 02 – CT GLs on outsourcing arrangements
Publication Date: April 9th 2021
Risks Covered: Outsourcing Risk
Business Processes Impacted: Data Quality Management
The agency has published revised Guidelines on outsourcing arrangements.10

Financial Industry Regulatory Authority (FINRA):
Exam and Risk Monitoring Program: Responding to COVID-19 and Looking Ahead
Publication Date: April 6th 2021
Risks Covered: Operational Risk
Business Processes Impacted: Consumer/Investor Protection
In the second of a two-part series on exam and risk monitoring, hear from senior executives at one of the world’s largest carrying and clearing firms.11

European Banking Authority (EBA):
EBA GL 2016 10-CT-V3 GLs on ICAAP and ILAAP information collected for SREP purposes
Publication Date: April 1th 2021
Risks Covered: Credit Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The agency has published Guidelines on internal capital adequacy assessment process (ICAAP) and internal liquidity assessment process for credit institutions (ILAAP).12

Financial Stability Board (FSB):
Evaluation of the effects of too-big-to-fail reforms: Final Report
Publication Date: April 1st 2021
Risks Covered: Compliance Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The agency has published the final report on its evaluation of the effects of too-big-to-fail reforms.13

Financial Conduct Authority (UK):
Finalised Guidance: Cancellations and refunds: helping consumers with rights and routes to refunds
Publication Date: April 1st 2021
Risks Covered: Compliance Risk
Business Processes Impacted: Consumer/Investor Protection
This guidance supports our consumer protection objective and is designed to reduce consumer confusion and /concern by outlining our expectations of firms to provide more information and make the consumer journey easier.14

Department of the Treasury (DoT), Office of the Comptroller of the Currency (OCC):
Artificial Intelligence : Request for Information on Financial Institutions’ Use of Artificial Intelligence, Including Machine Learning
Publication Date: April 1st 2021
Risks Covered: Operational Risk
Business Processes Impacted: Consumer/Investor Protection
US regulators are seeking views on the use of artificial intelligence by financial institutions.15

Medicines & Healthcare products Regulatory Agency (MHRA):
Guidance on the licensing of biosimilar products
Publication Date: May 6th 2021
Risks Covered: Operational Risk
Business Processes Impacted: Consumer/Investor Protection
The purpose of this guideline is to provide developers of similar biological medicinal products (also known as biosimilars) with a clear outline of the requirements for biosimilar products in Northern Ireland/Great Britain/UK.16

Pan American Health Organization (PAHO):
Regulatory System Strengthening in the Americas. Lessons Learned from the National Regulatory Authorities of Regional Reference
Publication Date: April 26th 2021
Risks Covered: Operational Risk
Business Processes Impacted: Business Continuity Management
This report presents data and analysis corresponding to essential regulatory functions and systems foundations to understand current practices, identify critical issues, and present a series of recommendations for action. The report also includes an overview of the market outlook and economic integration mechanisms in the Americas and their influence on regulatory policy and pharmaceutical trade.17

Federal Communications Commission (FCC):
Use of the 5.850-5.925 GHz Band
Publication Date: May 3rd 2021
Risks Covered: Credit Risk
Business Processes Impacted: Reporting
The Commission addresses issues remaining to finalize the restructuring of the 5.9 GHz band. Specifically, the Commission addresses: The transition of ITS operations in the 5.895-5.925 GHz band from Dedicated Short Range Communications (DSRC) based technology to Cellular Vehicle-to-Everything (C-V2X) based technology; the codification of C-V2X technical parameters in the Commission’s rules.18

FORTHCOMING REGULATIONS:

Regulation Asia:
Japan FSA to Issue Climate Risk Guidelines for Banks
Financial institutions /would/could be expected to incentivise borrowers to decarbonise through loan terms and preferential interest rates.19

The Hong Kong Monetary Authority (HKMA):
Principles for Operational Resilience and Revised Principles for Sound Management of Operational Risk
The authority would like to draw your attention to two sets of principles issued by the Basel Committee on Banking Supervision (BCBS).20

Insurance Europe (IE):                                
e-Privacy Regulation must not deprive consumers of access to telematics-based insurance products
The agency has published a paper that examines the impact of the different positions that have been taken by the European co-legislators – the European Commission, the Council of the EU and the European Parliament – on proposals for the e-Privacy Regulation.21

Department of the Treasury (DoT), Internal Revenue Service (IRS):
Requirements for Certain Foreign Persons and Certain Foreign-Owned Partnerships Investing in Qualified Opportunity Funds and Flexibility for Working Capital Safe Harbor Plans
This document contains proposed regulations that include requirements that certain foreign persons and certain foreign-owned partnerships /should meet in order to elect the Federal income tax benefits provided by section 1400Z-2 of the Internal Revenue Code (Code).22

Central Bank of Ireland (CBI):
CP140 – Cross Industry Guidance on Operational Resilience
The agency is seeking views on the proposed “Cross Industry Guidance on Operational Resilience”.23

Department of the Treasury (DoT), Office of the Comptroller of the Currency (OCC):
Agencies Issue Statement and Request for Information on Bank Secrecy Act/Anti-Money Laundering Compliance
The federal banking agencies, in consultation with the Financial Crimes Enforcement Network and the National Credit Union Administration, today issued a joint statement addressing how risk management principles described in the “Supervisory Guidance on Model Risk Management” relate to systems or models used by banks to assist in complying with the requirements of Bank Secrecy Act (BSA) laws and regulations.24

Financial Stability Board (FSB):
FSB Chair updates G20 on COVID-19 support measures, and a roadmap to address climate-related financial risks
The board has published a series of letters and reports ahead of the G20 virtual meeting to address climate related financial risk.25

European Securities and Markets Authority (ESMA):
Resiliency Roadmap for FDA Inspectional Oversight
The agency tallies pandemic inspection toll, issues new ‘resiliency roadmap’.26

Footnotes:

  1. “New regtech scheme to accelerate technology adoption in the financial sector,” Monetary Authority of Singapore (MAS), April 30, 2021. Access at: MAS commits $42m to spur adoption of technology solutions for risk management and regulatory compliance.
  2. “Consultation paper on assessment of risk weights and minimum LGD values,” European Banking Authority (EBA), April 29, 2021. Access at: Consultation paper on draft RTS concerning the assessment of appropriateness of risk weights and minimum LGD values.
  3. “Climate vulnerability assessment for Australia’s business community,” Business Insider, April 28, 2021. Access at: APRA has doubled down on its climate warnings, urging the business community to take stock of the ‘unprecented’ risks.
  4. “New regulatory framework for medical devices to include medical device software,” European Commission (EC), April 28, 2021. Access at: Medical devices – online manuals replacing paper instructions.
  5. “Guidance on managing the financial risks of climate change,” Australian Prudential Regulation Authority (APRA), April 23, 2021. Access at: APRA releases guidance on managing the financial risks of climate change.
  6. “Decision on harmonized standards on medical devices,” European Commission (EC), April 20, 2021. Access at: Commission Implementing Decision (EU) 2021/611 of 14 April 2021 amending Implementing Decision (EU) 2020/438 as regards harmonised standards on biological evaluation of medical devices, packaging for terminally sterilised medical devices, sterilisation of health care products and clinical investigation of medical devices for human subjects.
  7. “Result on digital euro,” European Central Bank (ECB), April 15, 2021. Access at: Eurosystem report on the public consultation on a digital euro.
  8. “Discussion paper on enhanced assurance expectations,” Office of the Superintendent of Financial Institutions (OSFI), April 13, 2021. Access at: OSFI launches consultation on enhanced assurance expectations.
  9. “Effectiveness of regulatory framework from a financial stability perspective,” European Central Bank (ECB), April 13, 2021. Access at: How effective is the EU Money Market Fund Regulation? Lessons from the COVID 19 turmoil.
  10. “Guidelines on outsourcing arrangements,” European Banking Authority (EBA), April 9, 2021. Access at: EBA GL 2019 02 – CT GLs on outsourcing arrangements.
  11. “Two part series on exam and risk monitoring,” Financial Industry Regulatory Authority (FINRA), April 6, 2021. Access at: Exam and Risk Monitoring Program: Responding to COVID-19 and Looking Ahead.
  12. “Guidelines on ICAAP and ILAAP,” European Banking Authority (EBA), April 1, 2021. Access at: EBA GL 2016 10-CT-V3 GLs on ICAAP and ILAAP information collected for SREP purposes.
  13. “Final report on too big to fail reforms,” Financial Stability Board (FSB), April 1, 2021. Access at: Evaluation of the effects of too-big-to-fail reforms: Final Report.
  14. “Guidance on reducing consumer confusion and frustration,” Financial Conduct Authority (UK), April 1, 2021. Access at: Finalised Guidance: Cancellations and refunds: helping consumers with rights and routes to refunds.
  15. “Seeking views on use of AI by financial institutions,” Department of the Treasury (DoT), Office of the Comptroller of the Currency (OCC), April 1, 2021. Access at: Artificial Intelligence : Request for Information on Financial Institutions’ Use of Artificial Intelligence, Including Machine Learning.
  16. “Guidelines on biosimilars,” Medicines & Healthcare products Regulatory Agency (MHRA), May 6, 2021. Access at: Guidance on the licensing of biosimilar products.
  17. “Report to understand current practices,” Pan American Health Organization (PAHO), April 26, 2021. Access at: Regulatory System Strengthening in the Americas. Lessons Learned from the National Regulatory Authorities of Regional Reference.
  18. “Finalize the transition of ITS operations in 5.850-5.925 GHz band,” Federal Communications Commission (FCC), May 3, 2021. Access at: Use of the 5.850-5.925 GHz Band.
  19. “Guidelines on climate risk for banks,” Regulation Asia, April 29, 2021. Access at: Japan FSA to Issue Climate Risk Guidelines for Banks.
  20. “Principles for sound management of operational risk,” The Hong Kong Monetary Authority (HKMA), April 21, 2021. Access at: Principles for Operational Resilience and Revised Principles for Sound Management of Operational Risk.
  21. “Paper on proposal for e-privacy regulation,” Insurance Europe (IE), April 19, 2021. Access at: e-Privacy Regulation must not deprive consumers of access to telematics-based insurance products.
  22. “Proposed regulation to elect federal income tax benefits,” Department of the Treasury (DoT), Internal Revenue Service (IRS), April 14, 2021. Access at: Requirements for Certain Foreign Persons and Certain Foreign-Owned Partnerships Investing in Qualified Opportunity Funds and Flexibility for Working Capital Safe Harbor Plans.
  23. “Seeking views on cross industry guidance on operational resilience,” Central Bank of Ireland (CBI), April 9, 2021. Access at: CP140 – Cross Industry Guidance on Operational Resilience.
  24. “Joint statement on supervisory guidance on model risk management,” Department of the Treasury (DoT), Office of the Comptroller of the Currency (OCC), April 9, 2021. Access at: Agencies Issue Statement and Request for Information on Bank Secrecy Act/Anti-Money Laundering Compliance.
  25. “To address climate related financial risk,” Financial Stability Board (FSB), April 6, 2021. Access at: FSB Chair updates G20 on COVID-19 support measures, and a roadmap to address climate-related financial risks.
  26. “New resiliency roadmap,” European Securities and Markets Authority (ESMA), April 9, 2021. Access at: Resiliency Roadmap for FDA Inspectional Oversight.

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