The Hong Kong Monetary Authority (HKMA) announced finalization of the list of financial services providers under the OTC derivatives regulatory regime and set out its observations and plans regarding the adoption of fintech in the banking sector.
As part of its Fintech 2025 Strategy, HKMA completed a Tech Baseline Assessment in June 2022 and published an assessment report that takes stock of banks’ current and planned adoption of fintech in the coming three years. The results of the assessment indicate that most of the banks participating in the exercise expect to make good progress in achieving their objectives for fintech adoption by 2025. The participating banks have not identified any clear-cut barriers to fintech adoption. By 2025, Regtech, Paytech, and Lendingtech are expected to be the most mature and widely adopted fintech business areas, while Investech and Wealthtech will enjoy mid-range levels of adoption. Buoyed by substantial industry interest, adoption of Greentech is set to double over the period, while Legaltech will also see significant growth albeit from a low base. Meanwhile, there exists considerable scope to further grow Insurtech adoption by banks. Taking into account the results of the assessment, HKMA has decided to promote developments in the fintech business areas of Investech, Wealthtech, Insurtech, and Greentech as well as the technology types of artificial intelligence and distributed ledgers in the years ahead. Going forward, HKMA will formulate, over the next few months, a detailed roadmap of initiatives, with initiatives under consideration including those that can help raise awareness, strengthen industry discourse, deepen technical understanding of the targeted fintech business areas and technology types, and further boost the availability of fintech solutions in Hong Kong. These are intended to complement the ongoing work under the Fintech 2025 Strategy.
As part of the other recent development, HKMA and the Securities and Futures Commission (SFC) updated the list of financial services providers under the OTC derivatives regulatory regime. The regulators also published conclusions of a joint consultation on the annual update to the list of financial services providers under the OTC derivatives clearing regime in Hong Kong. Having considered the market feedback, HKMA and SFC will proceed with the proposed changes to the list, as set out in the joint consultation paper. The proposed change to the list included the addition of a new financial services provider, namely Nomura Financial Products Europe GmbH. The list includes entities that belong to a group of companies appearing on the list of global systemically important banks (G-SIBs) or on the list of dealer groups which undertook to the OTC Derivatives Supervisors Group to work collaboratively with central counterparties, infrastructure providers, and global supervisors to make structural improvements to the global OTC derivatives markets (G15 dealers). The list also includes members of the largest central counterparties offering clearing for interest rate swaps in the US, Europe, Japan, and Hong Kong. HKMA and SFC will Gazette the updated list of financial services providers during the fourth quarter of 2022, for implementation on January 01, 2023.
Keywords: Asia Pacific, Hong Kong, Banking, Securities, OTC Derivatives, Financial Service Providers, G-SIBs, SFC, Fintech, Regtech, Lending, Insurtech, Greentech, Cloud Adoption, API, Artificial Intelligence, Distributed Ledger Technology, Insurance, HKMA
Previous ArticleHMT Publishes Review of AML/CFT Regulatory Regime
The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).
The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.