Welcome to the latest edition of Protiviti’s Asia-Pacific (APAC) Financial Services Insights. In this monthly newsletter, we provide a summary of important developments across the APAC financial services sector, including those related to the ever-changing regulatory landscape.
With the end of the year fast approaching, financial institutions across APAC are looking to start fresh in 2021. Across APAC, monetary authorities are working to together to leverage digital currencies to improve cross-border payments. Fintech and green financing are top priorities for the sector as authorities look to create new regulations and initiatives addressing these areas. Additionally, several countries are looking into better ways to promote positive conduct in the sector and reduce market risks.
The Hong Kong Monetary Authority (HKMA) has been working with China’s central bank and other regional monetary authorities on how to use digital currencies and trade platforms for fostering cross-border payments in the “Greater Bay Area” development zone and across Southeast Asia.
(South China Morning Post, 04/11/2020)
The pandemic has taken a toll on investments in Asia-Pacific's private financial technology companies, but recent monthly data suggests that a recovery may be in sight, according to S&P Global. Over the first three quarters of 2020, FinTechs based in the region raised a combined US$3.9 billion, down more than 26% compared to the same period of 2019 even adjusting for one very large deal that skewed 2019 results. Since the end of the third quarter,monthly funding volume and value have since risen, possibly signalling a cautious return of investor interest.
Australia’s banking regulator lowered the amount of reserves banks are required to hold under the central bank’s committed liquidity facility, due to the increasing amount of government bonds being issued and bought by banks. The Australian Prudential Regulatory Authority said in a statement it would allow a A$35 billion reduction in the total amount under the facility for major domestic banks, based on the amount they held at the start of 2020
Australia’s largest financial companies are targeting net-zero emissions over the next 30 years as the global shift to a low-carbon economy gathers pace. The Australian Sustainable Finance Initiative released 37 recommendations to help the financial sector target climate neutrality by 2050 and ensure it remains competitive.
Hong Kong, S.A.R.
The HKMA has outlined a slew of new initiatives on bank data exchange, trade finance digitisation and RegTech, during its annual Fintech Week. HKMA chief executive stated, "the central bank is exploring a new data strategy and considering building a new financial infrastructure called Commercial Data Interchange (CDI) to enable more efficient financial intermediation in the banking system". The CDI is a consent-based financial infrastructure that would enable more secure and efficient data flow between banks and sources of commercial data.
The HKMA’s Cybersecurity Fortification Initiative 2.0, an updated version of the framework designed to strengthen cyber resilience in the banking and financial sector, will officially roll out in January and be implemented over the following two years. Banks and financial institutions in Hong Kong will have until December 2023 to complete most of the tasks required, including risk and maturity assessments as well as other auditing.
(Bank Info Security, 06/11/2020)
The HKMA is teaming up with the International Finance Corporation to help commercial banks address climate change, as it seeks to cement the city’s place as a hub for green financing as US$29 trillion in green and climate investment opportunities are expected globally over the next decade.
Hong Kong’s Insurance Authority (IA) has created the Disciplinary Panel Pool (DPP) as part of its new disciplinary mechanism for licensed insurance intermediaries and authorized insurers. DPP will serve as an integral part of its disciplinary process, with disciplinary decisions being taken by panels formed by persons drawn from the DPP. The panel is composed of IA board members, as well as experienced professionals from the legal, financial, and other sectors.
The Monetary Authority of Singapore (MAS) has launched a S$35 million Productivity Solutions Grant or the country’s financial services industry. The grant will be used to offer assistance to smaller financial institutions. It will also be directed towards adopting all-digital solutions for improved or more efficient data reporting to the MAS. The grant is applicable to Singapore’s banks and may be expanded to include insurance companies and capital market intermediaries.
(Crowdfund Insider, 07/11/2020)
In a consultation paper, the MAS mooted the mandatory use of at least one of several types of information to verify individuals tapping an offsite financial service channel, such as phone or online banking, before processing any transaction or request. The MAS also proposed that financial institutions be barred from using commonly used personal information such as NRIC number, residential address, and date of birth as the only means of identity verification.
A set of best practices for commodity financing was rolled out and is the first such code for Singapore’s businesses. This comes after Singapore’s reputation as a trusted hub for commodity financing has taken a hit of late. About 28 banks together developed a code after consulting with trading organisations.
A senior official at China’s banking regulator has warned that technological advances in the financial industry risk creating monopolies, a day after Beijing unveiled new antitrust rules for the nation’s largest internet groups. The warning helped fuel a second day of selling of Chinese tech stocks, wiping a total of about US$254 billion in market value off e-commerce groups such as Alibaba, JD.com, and Tencent.
(Financial Times, 11/11/2020)
China’s central bank injected more than $120 billion yuan into the country’s banking system in a move to soothe rattled nerves after a series of debt shocks involving state-owned enterprises led to a bond selloff. Chinese banks and fund managers dumped their holdings of corporate bonds following a default by state-owned Yongcheng Coal & Electricity Holding Group Co, just weeks after the company raised money through a debt issue.
The Bank of Japan (BOJ) will exempt regional banking institutions from unfavourable rates if they agree to merge or spend less in an extremely uncommon usage of financial policy to reshape the financial industry. Local finance companies with authorised restructuring programmes will be able to earn a supplementary 0.1 per cent interesting to their deposits on BOJ, a bonus that would be well worth huge amounts of yen.
(Offshore Corporate Source, 10/11/2020)
More than 30 major Japanese firms will begin experiments next year towards issuing a common, private digital currency to promote digitalisation. The move follows the BOJ’s recently announced plan to experiment with issuing a digital yen, underscoring a growing awareness of the need for Japan to catch up to rapid global advances in financial technology. The group, consisting of Japan's three biggest banks as well as brokerages, telecommunication firms, utilities and retailers, will conduct experiments for issuing a digital currency that will use a common settlement platform.
(Business World, 19/11/2020)