www.pwc.com.au
PwC Regulatory Update December 2013 & January 2014 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
1. Legislative/Government developments
Future of financial advice (FOFA) amendments Delivering affordable and accessible financial advice released for public consultation The Assistant Treasurer, Hon Arthur Sinodinos, has announced reforms to The Government has released for public consultation draft regulations and the Future of Financial Advice (FOFA) legislation. Key elements of the legislation to enact its announced reforms to FOFA. Government's amendments include:
Key amendments include: • Removing the 'opt-in' requirement
• Removing the opt-in requirement • Streamlining requirements of the annual fee disclosure • Streamlining the annual fee disclosure requirements • Removing 'catch-all' from the best interests duty
• Amending the best interests duty to allow for scaled advice • Allow the provision of scaled advice
• Exempting general advice from conflicted remuneration • Exempting general advice from conflicted remuneration
• Amending grandfathering to allow for adviser movements. • Advisor’s continue access to grandfathered benefits Consultation Documents include: See media release
• Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 (bill) Review of Anti-Money Laundering Laws Announced • Explanatory Memorandum (EM) The Minister for Justice, Michael Keenan has announced a review of • Corporations Amendment (Streamlining of Future of Financial Advice) Australia’s anti-money laundering and counter-terrorism financing Regulation 2014 (regulation) (AML/CTF) laws. Mr Keenan said that review of Australia’s AML/CTF laws is required by section 251 of the AML/CTF Act. It provides an opportunity to • Explanatory Statement (ES) consult businesses and identify possible enhancements and simplifications to make these laws more effective. The consultation close on 19 February 2014. The Attorney-General’s Department is responsible for the review. It has See media release issued a paper that identifies a range of issues to assist interested parties in preparing submissions. Submissions close on 28 February 2014.
See media release PwC 2 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
1. Legislative/Government developments (cont’d)
Australian Government Protocols governing the Financial systems inquiry – Call for initial engagement between commonwealth bodies and the submissions Parliamentary Budget Officer The Financial System Inquiry is calling for initial submissions on the issues The Parliament of Australia has established the Parliamentary Budget Office set out in its terms of reference. (PBO), headed by the Parliamentary Budget Officer (the Officer), to provide Senators and Members of the House of Representatives with independent An important role of the Inquiry is to assess the current state of the and non-partisan analysis of the budget cycle, fiscal policy and the financial Australian financial system and the extent to which the system meets the implications of policy proposals. needs of users of the system. Respondents are invited to comment on the strengths of the system as well as identifying potential gaps and deficiencies. The PBO also prepare submissions to inquiries of Parliamentary Committees on request, conduct research on and analysis of the budget and The deadline for initial submissions is 31 March 2014. fiscal policy settings and prepare a post-election report to include costings of See media release the election commitments of Parliamentary parties after a general election.
See Treasury website Delivering a more efficient government -
Superannuation Priorities for Australia's presidency of the G20 in 2014 and the role of the Global Financial Safety Net The Assistant Treasurer, Senator the Hon Arthur Sinodinos AO, today announced that he was streamlining the consultation arrangements for Barry Sterland , Australian G20 Finance Deputy has spoken about the superannuation as part of the Government's efficiency reforms. Australia’s G20 priorities and role of the Global Financial Safety Net. This includes the cessation of three non-statutory bodies that are no longer The G20 will be dealing with an uncertain and challenging environment required: the SuperStream Advisory Council, Superannuation Advisory over the coming year. There are some welcome positive signs for growth, Committee and the Superannuation Roundtable. With reforms to the particularly in the US and Japan and the stabilisation of growth in China. superannuation sector in recent years largely implemented, the work of However, it is clear that world economic growth is weak and continues to these bodies has also been completed. Remaining issues are being taken up disappoint, particularly the presence of high output gaps and spare capacity. by forums chaired by the Australian Taxation Office.
See full speech See media release
PwC 3 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
1. Legislative/Government developments (cont’d)
2014 Benchmarking highlights Australia’s strengths as an investment destination
The 2014 Austrade Benchmark Report, which presents Australia's attractiveness as a business and investment destination, was launched by Australian Minister for Trade and Investment, Mr Andrew Robb today.
Using key economic, financial and demographic data, the report will assist potential foreign investors to evaluate Australia's economic credentials against similar economies and to understand the investment opportunities Australia presents. "Strong economic fundamentals combined with our proximity and experience in working with high growth Asian nations, make Australia an excellent place to do business," Mr Robb said.
See Austrade
PwC 4 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
2. What have the regulators been up to?
ASIC helps develop IOSCO report on the regulation of retail structured ASIC products Australian Securities and Investments Commission ASIC has assisted the International Organization of Securities Commissions (IOSCO) to publish a report on Regulation of Retail Structured Products. The report provides a toolkit outlining regulatory options that APRA security regulators globally may find useful to regulate retail structured products. The toolkit has been developed with the goal of enhancing investor protection by providing securities Australian Prudential and Regulatory regulators with possible approaches to address certain concerns with retail structured products. Authority See media release ASX Australian Securities Exchange ASIC issues further super reforms guidance ASIC has issued guidance to assist industry with superannuation reforms, as well as a consultation paper on Keeping Superannuation Websites up to Date. The paper relates to the new product dashboard RBA requirements for MySuper products, and the new fees and costs disclosure requirements for product Reserve Bank of Australia disclosure statements (PDSs) as well as periodic statements. Information Sheet 170 MySuper product dashboard requirements for superannuation trustees (INFO AUSTRAC 170) explains what information must be provided for each of the following measures: Australian Transaction Reports and • The return target Analysis Centre • The returns for previous financial years • A comparison between the return target and returns for previous financial years
• The level of investment risk
• A statement of fees and other costs. See media release
PwC 5 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
2. What have the regulators been up to? (cont’d)
ASIC ASIC provides relief from new super disclosure requirements Australian Securities and Investments ASIC has issued a class order [CO 13/1534] and taken a no-action position to assist the industry with the Commission introduction of recent superannuation reforms. This is aimed to facilitate compliance and ensures trustees have adequate time to comply with the reform timetable. APRA ASIC has: Australian Prudential and Regulatory • Changed the start date for compliance with new fees and costs disclosure arrangements by class order Authority from 31 December 2013 to 1 July 2014
• Provided conditional interim relief by class order so that RSE licensees do not have to provide a hard ASX copy of the product dashboard with the periodic statement Australian Securities Exchange • Provided a no-action position for RSE licensees so that information about accrued default amounts does not need to be included in an exit statement.
See media release RBA
Reserve Bank of Australia ASIC Update on FOFA AUSTRAC The Assistant Treasurer, Senator the Hon. Arthur Sinodinos announced proposed amendments to the Future of Financial Advice (FOFA) legislation. Consistent with ASIC's stance during the introduction of Australian Transaction Reports and other major policy reforms, a facilitative approach will be taken to the FOFA reforms until mid-2014. Analysis Centre In light of this approach, ASIC will not take enforcement action in relation to the specific FOFA provisions that the Government is planning to repeal. For example, ASIC will not take action for breaches of current section 962S of the Corporations Act 2001, which requires fee disclosure statements to be provided to retail clients with ongoing fee arrangements entered into before 1 July 2013.
See media release
PwC 6 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
2. What have the regulators been up to? (cont’d)
ASIC ASIC releases report on regulating complex products Australian Securities and Investments With financial products and markets continually growing in complexity, ASIC has reviewed its approach to Commission regulating complex products.
Today ASIC has published Report 384 Regulating complex products (REP 384) about its review. REP 384: APRA outlines the risks posed by complex products to retail investors Australian Prudential and Regulatory sets out ASIC’s recent and current work on complex products, including considering the whole of the Authority product lifecycle – development, distribution, sale, and post-sale, and
identifies opportunities for further work, including working with industry, where appropriate.
ASX See media release Australian Securities Exchange
ASIC enforcement report – July to December 2013 RBA ASIC today released its fifth six-monthly enforcement report, detailing outcomes achieved between 1 July Reserve Bank of Australia 2013 to 31 December 2013. Current areas of focus for ASIC include cracking down on misleading advertising of products and services, market misconduct, including insider trading, and the responsibility AUSTRAC of gatekeepers. ‘Future areas of focus include loan fraud, false accounting, and takeovers and shareholder disclosure, as Australian Transaction Reports and well as the ongoing focus on advertising,’ ASIC Commissioner Greg Tanzer said. Analysis Centre See media release
PwC 7 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
2. What have the regulators been up to? (cont’d)
ASIC ASIC issues class order providing relief for the mFund service Australian Securities and Investments ASIC has issued Class Order [CO 13/1621] that provides relief for facilitates retail clients applying for Commission interests in managed investment schemes through mFund Settlement Service (mFund). mFund is a facility operated by ASX Ltd and ASX Settlement Pty Ltd that allows investors to electronically apply for or redeem units in simple managed investment schemes that have been admitted to the service through APRA brokers who are authorised to participate. Australian Prudential and Regulatory The key aspects of CO 13/1621 are: Authority • It exempts responsible entities (REs) of managed investment schemes available through the mFund from only issuing interests in response to an application form that was included in or accompanied with ASX a PDS, and Australian Securities Exchange • REs will generally be allowed to issue on the basis of an electronic message through mFund indicating that the investor has been given the current version of the PDS. RBA See media release
Reserve Bank of Australia
AUSTRAC Australian Transaction Reports and Analysis Centre
PwC 8 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
2. What have the regulators been up to? (cont’d)
APRA releases harmonised standard and proposed guidance on risk ASIC management Australian Securities and Investments Commission APRA has released a package that harmonises and enhances its current risk management requirements.
APRA The package includes the final cross-industry : Prudential Standard CPS 220 Risk Management (CPS 220) Australian Prudential and Regulatory • Authority • Proposed prudential practice guide on risk management
• Response paper that addresses submissions received by APRA on the CPS 220 consultation package ASX released in May 2013. Australian Securities Exchange APRA is also releasing an amended Prudential Standard CPS 510 Governance (CPS 510) to ensure that governance requirements related to risk management are aligned with those of CPS 220.
See media release RBA Reserve Bank of Australia APRA releases final Basel III liquidity reforms APRA has released its final position on implementation of the main elements of the Basel III liquidity AUSTRAC reforms for authorised deposit-taking institutions (ADIs) in Australia. Australian Transaction Reports and Analysis Centre The Basel III liquidity reforms involve two new quantitative measures ― a 30-day Liquidity Coverage Ratio (LCR) to address an acute stress scenario (effective from 1 January 2015) and a Net Stable Funding Ratio (NSFR) to encourage longer-term funding resilience (effective from 1 January 2018). These requirements will apply to the larger, more complex ADIs. This position is provided in a response to submissions papers Prudential Standard APS 210 Liquidity (APS 210) and Prudential Practice Guide PPG 210 Liquidity (PPG 210), which has now come into force.
See media release
PwC 9 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
2. What have the regulators been up to? (cont’d)
ASIC Implementation of the Basel III liquidity framework in Australia Australian Securities and Investments APRA released a note for authorised deposit-taking institutions (ADIs) that provides further detail on the Commission operation of the committed liquidity facility (CLF). APRA has been consulting on the implementation of the main elements of the Basel III liquidity reforms in Australia and published a final Prudential Standard APS 210 Liquidity on 20 December 2013. APRA Australian Prudential and Regulatory The note released provides some observations arising from the exercise:: Authority • The RBA determined that the amount of Australian dollar HQLA that could reasonably be held by LCR ADIs was equivalent to around 30 per cent of the outstanding stock of Commonwealth Government ASX Securities and securities issued by state and territory governments the aggregate Australian dollar net cash outflow projected by the 35 ADIs for 2014 was approximately Australian Securities Exchange • $418 billion
• had the LCR been implemented from 1 January 2014, the total notional CLF granted for 2014 would RBA have been $282 billion. Reserve Bank of Australia See media release
AUSTRAC APRA releases framework for domestic systemically important banks in Australian Transaction Reports and Australia Analysis Centre APRA has released an information paper on the framework for dealing with domestic systemically important banks (D-SIBs) in Australia. The paper provides details on the methodology APRA has used to identify D-SIBs in Australia and how the higher loss absorbency (HLA) capital requirement will apply. APRA’s assessment methodology has regard to the Basel Committee’s four key indicators of systemic importance: size, interconnectedness, substitutability and complexity.
The D-SIB framework will come into effect from 1 January 2016. See media release
PwC 10 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
2. What have the regulators been up to? (cont’d)
Consultation on Draft Prudential Practice Guide - LPG 270 Group ASIC Insurance Arrangements Australian Securities and Investments Commission APRA has released for consultation a draft Prudential Practice Guide LPG 270 Group Insurance Arrangements (LPG 270).
APRA The draft LPG 270 provides guidance to insurers on good practice for group insurance arrangements with Australian Prudential and Regulatory regards to the identification of risks in accordance with the insurer’s risk management framework in Authority responding to tenders and data management. Comments on the draft document close on 7 March 2014. ASX See media release Australian Securities Exchange Reinsurance counterparty reporting requirements RBA APRA has issued a consultation on enhanced reinsurance counterparty reporting requirements for life Reserve Bank of Australia insurers. The paper proposes to enhance the current collection of reinsurance counterparty data, this is aimed to better assess the impact of a reinsurer failure on the capital coverage of individual life insurers and for the AUSTRAC industry as a whole. Australian Transaction Reports and Analysis Centre The paper also proposes to collect further information in Reporting Form LRF 117.0 Asset Concentration Risk Charge (LRF 117.0) on reinsurance asset exposures both before and after application of the insurance risk charge stresses.
See media release
PwC 11 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
2. What have the regulators been up to? (cont’d)
ASIC Release of updated MySuper Reporting Standard SRS 703.0 Fees Disclosed Australian Securities and Investments APRA has released an updated version of Reporting Standard SRS 703.0 Fees Disclosed (SRS 703.0). This Commission Reporting Standard sets out the requirements for the provision of information to APRA about the fees and costs required to be disclosed on a Product Disclosure Statement (PDS) relating to a MySuper product. APRA The Standards apply to each registrable superannuation entity licensee (RSE licensee) that is authorised to offer a MySuper product with respect to each MySuper product within its business operations. Australian Prudential and Regulatory Authority See APRA reporting standards
ASX APRA releases SPG 310 - Audit and Related Matters Australian Securities Exchange APRA has released Prudential Practice Guide SPG 310 Audit and Related Matters (SPG 310). This guide aims to assist an RSE licensee in complying with those requirements and to outline prudent RBA practices in relation to audit arrangements. It outlines sound practices for an effective external audit Reserve Bank of Australia framework to assist the Board and senior management to carry out their responsibilities for the sound and prudent management of the operations, financial position and risk controls of the business operations of the RSE licensee. AUSTRAC See APRA prudential practice guides Australian Transaction Reports and Analysis Centre
PwC 12 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
2. What have the regulators been up to? (cont’d)
ASIC SuperStream Benchmarking SRS 711.0 Australian Securities and Investments APRA has released Reporting Standard SuperStream Benchmarking (SRS 711.0). This Reporting Standard Commission sets out the requirements for the provision of information to APRA relating to the rollover and contribution transactions of a registrable superannuation entity. It includes Form SRF 711.0 SuperStream Benchmarking Measures and associated specific instructions. APRA SRF 711.0 was designed to collect, for a limited period, an additional small number of data items which Australian Prudential and Regulatory would give insight to the rate of take up of the Standards and some of the direct consequences of their Authority adoption.
APRA’s response to consultation on SRF 711.0 is summarised in this letter ASX
Australian Securities Exchange Letter to industry – Catastrophe risk governance APRA has released a letter to general insurers and level 2 insurance groups in relation to catastrophe risk RBA governance and management. The letter suggests insurers to ensure that it: Reserve Bank of Australia • Clearly sets and articulates its appetite for catastrophe risk • Understands the strengths, weaknesses and inherent assumptions of any models it uses AUSTRAC • Understands the degree of uncertainty in the results produced by the catastrophe models Australian Transaction Reports and • Complements model outputs with further work, including scenario testing and other analysis Analysis Centre • Makes decisions in relation to catastrophe reinsurance arrangements in light of the above
• Satisfies itself that the residual catastrophe risk is truly within its appetite. See media release
PwC 13 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
2. What have the regulators been up to? (cont’d)
Consultation paper - Clearing and settlement services for approved market ASIC operators and approved listing market operators Australian Securities and Investments Commission ASX has released a consultation paper Clearing and Settlement Services for Approved Market Operators and Approved Listing Market Operators: enhanced service levels and information handling standards. APRA ASX proposes to enhance its service level commitments and operational and technical standards for the Trade Acceptance Service and the Settlement Facilitation Service (TASSF). It also proposes to update the Australian Prudential and Regulatory information handling standards applicable to the provision of these services. Authority Submissions in response to the consultation close on 14 March 2014. ASX See media release Australian Securities Exchange Australia: ASX service for managed funds tipped for 2014 RBA The Australian Securities Exchange (ASX) is hopeful to get approval from the securities regulator and the Reserve Bank of Australia federal government to offer a platform for managed funds investment opportunities. It is expected that investors will be able to start buying and selling managed funds on the ASX in 2014. Fund managers, sharebroker and registry groups have signed up to the platform hoping to attract investors who are accustomed to trading assets directly, rather than through a financial planner. The platform would enable AUSTRAC individual investors to buy and sell units in managed funds, including Australian and international equities Australian Transaction Reports and and bonds, in the same way as shares. Analysis Centre The launch is expected in the first quarter of 2014.
Source: Financial review
PwC 14 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
2. What have the regulators been up to? (cont’d)
ASIC Consultation on variations to the MasterCard and visa access regimes Australian Securities and Investments The RBA has issued a consultation paper Proposed Variation to the MasterCard and Visa Access Regimes Commission on possible changes to access arrangements for the MasterCard credit, Visa credit and Visa Debit systems, including draft variations to the Reserve Bank’s Access Regimes for those systems. APRA The existing access framework was implemented in 2004 and 2005. It has allowed ineligible entrants for membership to participate in the card schemes without compromising the financial safety of the schemes. Australian Prudential and Regulatory Recent developments suggest that the Access Regimes in their current form may no longer be fulfilling Authority their original objective and could unnecessarily be preventing some prospective participants from entry. The Bank sought feedback on draft variations to the Access Regimes, which would allow MasterCard and ASX Visa to widen eligibility for membership of their respective systems. See media release Australian Securities Exchange
RBA Response to the consultation on eligibility criteria for CMBS and other ABS, and measures to strengthen privacy Reserve Bank of Australia The RBA published a consultation paper New Eligibility Criteria for Commercial Mortgage Backed (CMBS) and Other Asset-Backed Securities (ABS), and Measures to Strengthen Borrower Privacy under AUSTRAC the Residential Mortgage Backed Securities (RMBS) reporting arrangements. The Authority has published Australian Transaction Reports and its response to the individual submissions received and annotated versions of the reporting templates. The Analysis Centre main changes to the reporting arrangements are outlined below: • The implementation date for the new reporting requirements for CMBS and other ABS will be 30 June 2015
• The proposals to strengthen borrower privacy for RMBS and other loan level disclosures will be implemented in full. This reflects general support for the additional measures.
See media release
PwC 15 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
2. What have the regulators been up to? (cont’d)
Liquidity and funding markets conference paper ASIC Australian Securities and Investments The theme of RBA’s conference for 2013 was ‘Liquidity and Funding Markets’. The conference covered a Commission range of issues including the ways in which private sector institutions are responding to changes in funding markets and their liquidity, the interaction between central banks and funding markets, the APRA macroeconomic and financial stability consequences of these changes and the impact of regulatory change. Australian Prudential and Regulatory See publication Authority Trends in the Funding and Lending Behaviour of Australian Banks - Chris ASX Stewart, Benn Robertson and Alexandra Heath Australian Securities Exchange RBA has published a research paper Trends in the Funding and Lending Behaviour of Australian Banks. The paper outlines the role the banking system plays in the transmission of monetary policy and the transformation of risk.
RBA The paper also discusses some recent trends, including the increased focus on deposit funding and Reserve Bank of Australia potential changes in the determination of lending rates due to changes in the pricing of risk. These trends are, in turn, being influenced by changes in the preferences towards, and understanding of, different types of risk by investors, banks’ management and regulators. AUSTRAC See media release Australian Transaction Reports and Analysis Centre
PwC 16 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
2. What have the regulators been up to? (cont’d)
Key terms and
ASIC Review of anti-money laundering laws announced Australian Securities and Investments AUSTRAC has issued draft amendments for public consultation on Anti-Money Laundering and Counter- Commission Terrorism Financing Rules (AML/CTF Rules). These amendments are proposed for review on the following chapters. APRA • Issuing or selling a security or derivative (Chapter 21) Australian Prudential and Regulatory • Key terms and concepts (Chapter 1) Authority • Customer identification (Chapter 4) ASX • Special AML/CTF program (Chapter 5) • Standard AML/CTF program (Chapter 8) Australian Securities Exchange • Joint AML/CTF program (Chapter 9) RBA • Ongoing customer due diligence (Chapter 15) • Disclosure certificates (Chapter 30) Reserve Bank of Australia See AUSTRAC website AUSTRAC Australian Transaction Reports and Analysis Centre
PwC 17 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
3. Industry bodies
FSC FoFA changes will make advice more accessible Financial Services Council The FSC welcomes the refinements to the FoFA reforms which will now be able to provide consumers with affordable advice that is tailored specifically to their needs. FSC accepts the clarification of the steps APCA required to meet the best interest duty by removal of a “catch-all” provision. Australian Payments Clearing The authority has always supported FoFA as a means to raise the bar for advisers and to create more Association affordable and accessible advice for consumers.
FPA See media release Financial Planning Association of Australia ASFA Asia Pacific is Australia’s biggest source of investment fund flows-
Association of Superannuation Funds Australian Investment Managers Cross-Border Flows Report 2013 of Australia The FSC has released the second annual report on Australian Investment Managers Cross-Border Flows. ABA The report indicates that the Asia pacific region is the biggest source of investment into Australian managed funds. Key findings of the report are: Australian Bankers Association • The flow of funds into Australia through Managed Investment Trusts (MITs) increased by 78.3 per ASF cent over three years from $20.3 billion at 1 January 2010 to $36.2 billion at 31 December 2012 Australian Securitisation Forum • The Asia Pacific region continues to be the most prevalent source of fund flow into Australia with 66 per cent of funds sourced from the region. ARCA • Australian fixed interest and cash was the largest asset class at 31 December 2012 − 49 per cent of the sample Australian Retail Credit Association • Fund managers were the most prevalent investor type at 38 per cent closely followed by pension funds AFMA at 32 per cent Australian Financial Markets • Overseas asset classes accounted for 24 per cent of investments. Association See media release
PwC 18 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
3. Industry bodies (cont’d)
FSC APCA releases new report on cheques and the digital economy. Financial Services Council APCA has released the second Milestones Report on the transition of Australian payments to the digital economy. Highlights of the report include:
APCA • Same-day settlement for direct entry payments, which was introduced in November 2013, will support Australian Payments Clearing faster movement of value in routine electronic payments Association • The use of mobile phones for payments, in particular for online banking, is growing FPA Financial Planning Association of • APCA is coordinating a digital cheque clearing strategy to increase efficiencies in the cheque processing Australia system. ASFA • The industry is developing new real-time payments infrastructure which will improve electronic payments and provide another alternative to cheques Association of Superannuation Funds of Australia • Initiatives to automate paper-based processes, such as SuperStream for superannuation payments and PEXA for electronic property exchange in the real estate industry, have made significant advances. ABA See media release Australian Bankers Association
ASF Australian Securitisation Forum
ARCA Australian Retail Credit Association AFMA Australian Financial Markets Association
PwC 19 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
3. Industry bodies (cont’d)
FSC Industry completes NPP “Design and Plan” phase Financial Services Council APCA has published the recent development work for New Payments Platform’s (NPP) “Define and Plan” phase of the Program. The update adopts business requirements and a conceptual architecture for the APCA proposed platform along with a detailed plan and indicative budget for future phases of development. Australian Payments Clearing High-level decisions about vendor engagement have also been agreed: Association • Sourcing for the Basic Infrastructure will be as complete services (including design, establishment and FPA operation) for Switch, Addressing and Network Financial Planning Association of Australia • Vendors may bid for one, two or all three complete services. Any industry partnerships required for service delivery will need to be formed by the bidding vendor ASFA • Sourcing will involve an initial prequalification process commencing in February 2014 during which Association of Superannuation Funds vendors can assess their suitability against key evaluation criteria of Australia • The prequalification process will be followed by a Request for Tender process in March 2014. ABA See media release Australian Bankers Association
ASF Australian Securitisation Forum
ARCA Australian Retail Credit Association AFMA Australian Financial Markets Association
PwC 20 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
3. Industry bodies (cont’d)
FSC FPA commends timely release of FoFA draft legislation Financial Services Council The FPA has welcomed the timely release of the draft amendments to FoFA. FPA CEO Mark Rantall said that FPA has advocated for a more sensible, workable and practical FoFA legislation.
APCA The authority has always spoken out against the need for Opt-In and a retrospective fee disclosure Australian Payments Clearing statement. It has also backed changes to the Grandfathering Regulations to remove the unintended market Association competition inequities and restrictions of trade issues for financial planners.
FPA Mr Rantall also said that the regulator believes that opt-in and the retrospective fee disclosure statements Financial Planning Association of are onerous policies that will not benefit Australians seeking quality financial advice. We previously called Australia for the removal of these policies and support the draft amendments that support this removal ASFA See media release Association of Superannuation Funds of Australia ABA Australian Bankers Association
ASF Australian Securitisation Forum
ARCA Australian Retail Credit Association AFMA Australian Financial Markets Association
PwC 21 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
3. Industry bodies (cont’d)
FSC ASFA welcomes draft FoFA legislation Financial Services Council The ASFA welcomes the draft version of the FoFA reform. ASFA CEO Ms Pauline Vamos has said that it is a good outcome for fund members as it does not change the definition of intra-fund advice. The ability to APCA deliver intra-fund advice in its current form enables all superannuation funds to provide real help to fund members regarding their interest in the fund. This will have fund members continue to have access to this Australian Payments Clearing important service. Association FPA See media release Financial Planning Association of Australia ASFA Association of Superannuation Funds of Australia ABA Australian Bankers Association
ASF Australian Securitisation Forum
ARCA Australian Retail Credit Association AFMA Australian Financial Markets Association
PwC 22 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
3. Industry bodies (cont’d)
FSC ABA welcomes decision by US regulator on swaps rules Financial Services Council The ABA welcomes the decision of the United States regulator, the Commodity Futures Trading Commission (CFTC), to recognise many aspects of the domestic regulatory regime governing how swaps APCA are traded. ABA said that the aim of the new rules is to make the swaps market more transparent and prevent a repeat of the 2008 global financial crisis when the market was thrown into upheaval. Australian Payments Clearing Association Steven Münchenberg, Chief Executive of the ABA said that having substituted compliance from the CFTC will allow Australian banks to easily comply with US rules. This will reduce costs for Australian banks, their FPA customers and provide certainty for the marketplace. Financial Planning Association of Australia See media release ASFA Association of Superannuation Funds of Australia Accounts for seniors and pensioners The ABA has worked with its member banks to deliver best practice changes to accounts suitable for ABA seniors and pensioners. The Minister for Social Services sets, or ‘deems’, interest rates for pensioners. Australian Bankers Association When the Government assesses a pensioner’s income, it assumes that a ‘deemed’ rate of return has been earned regardless of what interest rate is actually being earned on the account. ASF ABA and its member banks have worked to address concerns and have agreed to improve disclosures about Australian Securitisation Forum these products. Banks have voluntarily agreed to: • Ensure these accounts are not named ‘deeming accounts’ ARCA • Phase out certain descriptions that provide the impression that the interest rates on these products Australian Retail Credit Association matches the deeming rate set by the Federal Government AFMA • If banks structure the interest rates on these products in a tiered manner according to the account Australian Financial Markets balance, ensure this is clearly disclosed as a feature of the account. Association See media release
PwC 23 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
3. Industry bodies (cont’d)
FSC ASF comment letter - Credit risk retention Financial Services Council The ASF has submitted a comment letter to the US regulators relating to the re-proposed rules for credit risk retention for securitisations issued to US investors. The letter seeks to highlight differences between APCA US and Australian residential mortgage underwriting practices and the potential negative impact the US credit retention rules may have on Australian Residential Mortgage-Backed Securities (RMBS) issuers. Australian Payments Clearing Association See comment letter FPA Financial Planning Association of Australia ASFA Association of Superannuation Funds of Australia ABA Australian Bankers Association
ASF Australian Securitisation Forum
ARCA Australian Retail Credit Association AFMA Australian Financial Markets Association
PwC 24 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
3. Industry bodies (cont’d)
FSC OAIC approves and registers CR code Financial Services Council ARCA received the registration of the Credit Reporting Privacy Code (CR Code) by the Office of the Australian Information Commissioner (OAIC).
APCA The registration of the CR Code by the national credit reporting regulator is the part of Australia’s new Australian Payments Clearing credit reporting regime which will into effect in March 2014. Association ARCA CEO Damian Paull said that these reforms will bring Australia into line with other Organisation for FPA Economic Co-operation and Development (OECD) countries and will help empower consumers by Financial Planning Association of improving awareness and engagement with their credit report – as is common in other countries. Australia See media release ASFA
Association of Superannuation Funds of Australia ABA Australian Bankers Association
ASF Australian Securitisation Forum
ARCA Australian Retail Credit Association AFMA Australian Financial Markets Association
PwC 25 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
3. Industry bodies (cont’d)
FSC AFMA welcomes measured approach to FOFA changes Financial Services Council AFMA has welcomed the Government’s announcement of amendments to FOFA. AFMA sees changes mainly with clarity around the operation of the best interests duty as reflective of the Government's stated APCA intention to work closely with industry. Australian Payments Clearing AFMA said that this is a significant contributor to national income as well as it remains affordable for Association consumer to operate in a reasonable cost environment.
FPA See media release Financial Planning Association of Australia
ASFA
Association of Superannuation Funds of Australia ABA Australian Bankers Association
ASF Australian Securitisation Forum
ARCA Australian Retail Credit Association AFMA Australian Financial Markets Association
PwC 26 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Global
IMF: Executive Board reviews IMF: Executive Board reviews mandatory Financial Stability Assessments mandatory Financial Stability under the Financial Sector Assessment Program Assessments under the Financial The IMF has reviewed mandatory Financial Stability Assessments under the Financial Sector Assessment Sector Assessment Program Program (FSAP). It has reviewed the methodology that determines whether a country’s financial sector is systemically important.
The new methodology places greater emphasis on interconnectedness; expands the range of covered exposures; takes into consideration the potential for price contagion across financial sectors; and uses the most recent available data, while adhering to the principles of relevance, transparency, and even- handedness established by the 2010 Executive Board decision.
Based on the new methodology, four additional jurisdictions—Denmark, Norway, Poland, and Finland were added to the list of jurisdictions whose financial sectors are considered to be systemically important. The list of jurisdictions and the methodology for assessing systemic importance will continue to be reviewed periodically. Source: IMF
FSB publishes questions to FSB publishes questions to accompany the consultative document on accompany the consultative supervisory interaction on risk culture document on supervisory interaction on risk culture The FSB has published the questions for public consultation in relation to a guidance on Supervisory Interaction with Financial Institutions on Risk Culture. This guidance identifies the foundational elements that contribute to the promotion of a sound risk culture within a financial institution. It aims to assist supervisors in identifying core practices and attitudes that may be indicators of the institution's risk culture. The supplement sets out some questions to consider in preparing the submissions on the consultative document.
Source: FSB
PwC 27
Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Global (cont’d)
Basel Committee: Progress in Basel Committee: Progress in adopting the principles for effective risk data adopting the principles for aggregation and risk reporting effective risk data aggregation and The Basel Committee on Banking Supervision has issued a progress report on banks' adoption of the risk reporting Principles for Effective Risk data Aggregation and Risk Reporting. The aim of these principles is to strengthen risk data aggregation and risk reporting practices at banks to improve their risk management practices and decision-making processes.
The report provides a snapshot of the global systematically important banks (G-SIBs) overall preparedness to comply with the Principles, as well as the related challenges they face. The Committee suggests that national supervisors should apply these principles to institutions identified as domestic systemically important banks. Firms designated as G-SIBs are required to implement the Principles in full by 2016.
Source: BIS
Basel Committee on Banking Supervision: Revised policy framework for Basel Committee on Banking banks' equity investments in funds issued by the Basel Committee Supervision: Revised policy The Basel Committee has published a final standard that revises the prudential treatment of banks' framework investments in the equity of funds within the Basel risk-based capital framework. The revised framework includes three hierarchy approaches for setting capital requirements for banks' equity investments in funds that provides better risk sensitivity and transparency. The revised standard improves upon the existing regime by:
• Incorporating a fund's leverage when determining the capital requirements for banks' investments
• Clarifying the application of the Basel framework's capital adequacy standards for credit risk
• More appropriately reflecting the risk of a fund's underlying investments, including a higher capital requirement for situations in which a fund's holdings are not sufficiently transparent.
The revised framework also addresses risks associated with banks' interactions with shadow banking entities by ensuring that exposures to funds engaging in shadow banking activity are supported by adequate capital. Source: BIS PwC 28
Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Global (cont’d)
Basel Committee: Fundamental elements of a bank’s capital planning Basel Committee: Fundamental process elements of a bank’s capital planning process The Basel Committee released its Enhancements to the Basel II framework in July 2009, emphasising, amongst other things, the importance of effective capital planning and longer-term capital maintenance.
Recently, the Basel Committee has undertaken an informal data gathering exercise in 15 member countries looking at capital planning in different types of institution. This paper presents sound practices observed at some banks to foster overall improvement in the capital planning processes of banks covering
• Internal control and governance
• Capital policy and risk capture
• Forward-looking view
• Management framework for preserving capital. Source: BIS
PwC 29 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Europe
EBA publishes report on risks and vulnerabilities of the EU banking sector EBA publishes report on risks and vulnerabilities of the EU banking The European Banking Authority (EBA) has published its fourth semi-annual report, Risk Assessment sector Report January 2014, on risks and vulnerabilities of the EU banking sector. The report identifies improvements in market confidence, funding and capital positions. The report cautions about ongoing uncertainties on asset valuations and future profitability in a fragile economic environment. Additionally, the report highlights risks of harmful business practices and possible measures for addressing them through coordinated policy and supervisory actions.
Source: EBA
EBA publishes outcome of 2013 EU-wide transparency exercise The European Banking Authority (EBA) has published the results for the EU-wide Transparency Exercise EBA publishes outcome of 2013 on 64 European banks from 21 countries of the European Economic Area (EEA). The data covers the first EU-wide transparency exercise half of 2013 and is based on 730,000 data points including capital, Risk Weighted Assets (RWAs) and sovereign exposures.
This transparency exercise is part of the EBA's efforts to foster transparency and market discipline as part of its ongoing work to improve disclosures under the Basel Pillar 3 requirements, as set out in the EU Capital Requirements Directive. Through this disclosure exercise, the EBA aims to promote greater understanding of capital positions and exposures of EU banks. The result showed a continued positive trend in EU banks' capital position. Total net sovereign exposures towards EEA countries declined by about 9% during 2011, but increased afterwards by 9.3%. Exposures at default showed a modest reduction (-3% between December 2012 and June 2013). The distribution of exposures across asset classes is shown stable over time. The ratio of total defaulted assets to total exposure is 3.8%; corporate and retail portfolios display the highest ratios - 6.9% and 4.2% respectively.
Source: EBA
PwC 30 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Europe (cont’d)
EBA publishes reports on comparability of Risk Weighted Assets (RWAs) EBA publishes reports on and pro-cyclicality comparability of Risk Weighted Assets (RWAs) and pro-cyclicality The European Bank Authority (EBA) has published three reports on the context of its ongoing work on comparability of Risk Weighted Assets (RWAs):
• An interim report on the Consistency of RWAs in SME and residential mortgages portfolios (report)
• A report on the Comparability of supervisory rules and practices (report)
• A report on Variability of RWAs for market risk portfolios (report) The objective of this work is to address unjustified differences in the denominator of the capital ratios, to understand the sources of such differences and, if need be, to formulate the necessary policy solutions to enhance convergence in supervisory and banks' practices as well as improving disclosures.
Source: EBA
EBA consults on methodology for EBA consults on methodology for global systemically important global systemically important institutions institutions The European Bank Authority (EBA) has launched a consultation paper which covers, the draft regulatory technical standards (RTS) on the methodology for identifying global systemically important institutions (G-SII), draft implementing technical standards (ITS), as well as Guidelines on the disclosure of the values of indicators used in the identification process.
The paper suggests Capital Requirements Directive (CRD) requires each year, Member States’ authorities to calculate an individual score to measure a bank’s systemic significance. Five categories of indicators to be used in this scoring process are defined in the CRD and the EBA draft RTS specify twelve further sub- indicators falling under these categories.
The draft ITS defines uniform disclosure requirements to publicise the values used for the identification and scoring process for G-SIIs. These would ensure fair competitive conditions between comparable groups of institutions, greater convergence of supervisory practices and more accurate risk assessments across the EU.
Source: EBA PwC 31 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Europe (cont’d)
EBA publishes final draft technical standards on conditions for assessing EBA publishes final draft technical materiality of extensions and changes of internal approaches for credit and standards on credit and operational risk operational risk The European Bank Authority (EBA) has published its final draft regulatory technical standards (RTS). The RTS specifies the conditions for assessing the materiality of extensions and changes of internal approaches for credit and operational risk. These RTS will also be part of the single rulebook aimed at enhancing regulatory harmonisation in Europe.
The key features of the proposed RTS include:
• The introduction of three categories of model extensions and changes (which require permission; ex- ante notification and ex-post notification)
• The introduction of an exhaustive list of qualitative conditions, which is linked to the minimum requirements for internal approaches
• The design of the quantitative threshold as back-stop regime
• The inclusion of standardised documentation requirements, which enable competent authorities to assess compliance of institutions with the above rules Source: EBA
PwC 32 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Europe (cont’d)
Single Resolution Mechanism (SRM) EU agrees on single Resolution European Parliament and EU member states have made a political agreement on the bank recovery and Mechanism (SRM) resolution directive (BRRD). This will provide a legal framework to deal with bank failures across all 28 EU member states from 1 January 2015 onwards.
The BRRD is an intermediate step towards the Single Resolution Mechanism (SRM) which introduces a bail-in principle that will apply from January 2016. This would ensure that shareholders and creditors will be the first in line to take a hit in case a bank fails and not taxpayers. Its provisions would be enforced by a resolution authority. For each member state a fund will be established which will come to the aid of banks in order to help them recover or to wind them down.
Source: Lithuanian Presidency
UCITS V - Council sets out its position on UCITS UCITS V - Council sets out its The EU Council announced that it has agreed its position on a draft directive aimed at amending EU rules position on UCITS on investment funds as concerns depositary functions, remuneration policies and sanctions (UCITS V). The UCITS V proposal will progress the consistent application of undertakings for collective investment in transferable securities (UCITS) rules in EU member states. Negotiations on the draft directive will begin with the European Parliament, with the aim of adopting the directive at first reading. When adopted and published, member states will have two years to transpose the directive into national law.
Source: Council of the European Union
PwC 33 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Europe (cont’d)
Fines issued by UK regulator up 50% in 2013 UK: Fines issued by UK regulator The Financial Conduct Authority (FCA) has levied fines against the financial services industry by almost up 50% in 2013 50% for 2013. The FCA handed out fines totalling £444.2m (€530.1m) since taking over from the Financial Services Authority in April, which reflects the harder line being taken by the FCA.
Source: IFAonline
PwC UK: Divide between compliance and business This PwC survey notes that only 30 per cent of UK asset management compliance teams have a physical UK: Divide between compliance presence within the business, highlighting the disconnect between compliance and investment staff across and business the industry. The survey also says that there is no consistent reporting line for compliance functions across the industry and only 65 per cent of firms have compliance strategies signed off by the board.
Source: Ignites Europe
PwC 34 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Europe (cont’d)
Competition and Markets Authority publishes guidance on approach to UK: Competition and Markets new powers Authority publishes guidance on approach to new powers The Competition and Markets Authority (CMA) has published guidance on its approach to using some key legal powers, including tough new measures to impose financial penalties on firms that do not comply with competition investigations or with interim measures imposed in merger cases. The guidance includes 7 documents:
• Mergers: guidance on the CMA’s jurisdiction and procedure
• Market studies and market investigations: supplemental guidance on the CMA’s approach
• Administrative penalties: statement of policy on the CMA’s approach
• Cost recovery in telecoms price control references: guidance on the CMA’s approach
• Transparency and disclosure: statement of the CMA’s policy and approach • Remedies: guidance on the CMA’s approach to the variation and termination of merger, monopoly and market undertakings and orders
• Transitional arrangements: guidance on the CMA’s proposed approach– Part 1 These new measures will strengthen the UK’s competition regime. It will enable the CMA to impose financial penalties for failure to comply with investigatory requirements in mergers, markets, and Competition Act investigations. Source: Gov.UK
PwC 35 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – US
Financial regulators approve long-awaited Volcker Rule Financial regulators approve long- Banking regulators have issued final rules to implement section 619 of the Dodd-Frank Wall Street Reform awaited Volcker Rule and Consumer Protection Act (the "Volcker rule"). The provision introduces a variety of guidelines to limit risk-taking by banks with federally insured deposits.
The rule restricts banks with federally insured deposits from engaging in risky investment activities undertaken for their own benefit, a practice known as proprietary trading, as well as from taking ownership stakes in hedge funds and private equity funds.
The rule requires banking entities with significant trading operations to establish a detailed compliance program and their CEOs to attest that the program is designed to achieve compliance with the final rule. Independent testing and analysis of an institution's compliance program will also be required. The final rules reduce the burden on smaller, less-complex institutions by limiting their compliance and reporting requirements. Additionally, a banking entity that does not engage in covered trading activities will not need to establish a compliance program. Source: Board of Governors of the Federal Reserve System
SEC announces 2014 examination priorities SEC announces 2014 examination The US Securities and Exchange Commission (SEC) has announced its report on Examination Priorities priorities for 2014. This report covers a wide range of issues at financial institutions, including investment advisers and investment companies, broker-dealers, clearing agencies, exchanges and other self-regulatory organizations, hedge funds, private equity funds, and transfer agents.
The examination priorities address market-wide issues and those specific to particular business models and organizations. These priorities are aimed to help to increase transparency, strengthen compliance, and inform the public and the financial services industry about key risks being observed.
Source: SEC
PwC 36 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Asia
NZ: FMA releases stakeholder feedback report NZ: FMA releases stakeholder The Financial Markets Authority (FMA) has released the findings of the 2013 Stakeholder Feedback feedback report Report.
The report surveyed stakeholder views on the following topics:
• Key achievements and shortcomings of FMA’s work to date
• Gaps in FMA’s activities or mandate
• Organisational capabilities of FMA
• Prioritisation of key shortcomings and gaps to be addressed
• Priorities for FMA going forward Source: FMA
NZ: FMA guidance helps consumers access financial advice The Financial Markets Authority (FMA) has released a guidance report Limited Personalised Advice to NZ: FMA guidance helps help financial advisers provide high quality personalised advice that is time-efficient and adopts the right consumers access financial advice level of compliance in NZ. The FMA believes that improved access to financial advice through strategies such as advisers offering limited personalised advice, is crucial to increase investor participation in the financial markets. The guidance note provides examples of when such advice may be given. Source: Mondovisione
PwC 37 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Asia (cont’d)
China to require new disclosures by systemically important banks China to require new disclosures The China Banking Regulatory Commission (CBRC) has said that it requires the country's largest lenders by systemically important banks to disclose their off-balance-sheet exposures and other indicators. This is aimed to implement global rules designed to strengthen regulation of "too-big-to-fail" banks.
These Banks will be required to disclose 12 indicators that track size, interconnectedness, complexity and other factors. CBRC has also said that the banks should make the disclosures on their websites or in their annual financial statements within four months of the end of their accounting year or no later than July 31 each year.
Source: Reuters
China: More rules on shadow banks are expected Analysts expect more regulation on China’s shadow banking in the post-Third Plenum economy. Michael China: More rules on shadow Martin, a specialist in Asian affairs for the Congressional Research Service anticipates the China Banking banks are expected Regulatory Commission will begin regulating shadow-banking activity with more regulations coming out to define the scope of shadow banking. According to JPMorgan’s estimation, China's shadow banking industry is worth almost 70 percent of the country's GDP, at approximately 36 trillion yuan ($5.86 trillion). Analyst from Federal Reserve Bank of San Fransico said that the shadow-banking sector contributes to the imbalance in the Chinese economy. This would not go away until the government makes substantial progress on a number of fronts.
Source: China Daily
PwC 38 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Asia (cont’d)
China: Rule changes mean China's stock markets set for IPO deluge China: Rule changes mean China's China Securities Regulatory Commission introduced new rules for initial public offerings. Under the new stock markets set for IPO deluge rules, much of the screening process will be entrusted to brokerages underwriting the issuance of initial shares, auditing companies examining the accuracy of financial statements and law firms advising the business looking to go public.
Under the current system, government performs most of the screening of companies seeking to list, after the reform these activities will be performed by private entities. These rules will increase transparency as the companies would have to publish more extensive financial records and make them publicly available earlier in the listing process.
This will bring China closer to the market-oriented public offering registration systems that are common in industrialized nations such as the U.S. and Japan after the reforms.
Source: Nikkie Asian Review
Korea: Foreign financial firms urged to bolster internal controls
Korea: Foreign financial firms The Financial Supervisory Service (FSS) has recommended the foreign financial firms operating in Korea urged to bolster internal controls to strengthen their internal controls to prevent financial wrongdoings. FSS Governor Choi Soo-hyun has said that the CEOs of foreign financial firms need to focus on in-house control and involve themselves directly in the efforts to prevent financial mishaps. He also indicated to strengthen communication with the foreign financial firms and ensure predictable financial policy enforcement.
Source: The Korea Herald
PwC 39 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Asia (cont’d)
Singapore: Consultation paper on Related Party Transaction Requirements Singapore: Consultation paper on for Banks Related Party Transaction Requirements for Banks The Monetary Authority of Singapore (MAS) has issued a consultation paper on Related Party Transaction Requirements for Banks. The paper proposes changes to the requirements on banks' transactions with their related parties (RPTs), which are set out in MAS Notice 643 on Transactions with Related Parties and the Banking Act.
The proposed changes are intended to ensure that every RPT is conducted free of conflicts of interests. Also, the RPTs should be conducted based on terms and conditions that are not more favourable than similar transactions with non-related parties under similar circumstances.
Source: MAS
Singapore: IMF FSAP Assessment of core principles The International Monetary Fund (IMF) has released the Financial Sector Assessment Program (FSAP) Singapore: IMF FSAP Assessment assessment reports for Singapore. The focus of FSAP assessments is to gauge the stability of a country’s of core principles financial sector and assess its potential contribution to growth and development. The assessment reports are as follows:
• Detailed Assessment of Compliance - Basel Core Principles for Effective Banking Supervision (IMF 13/342)
• Detailed Assessment of Observance - Insurance Core Principles (IMF 13/343)
• Detailed Assessment of Implementation - IOSCO Objectives and Principles of Securities Regulation (IMF 13/344)
• Detailed Assessment of Observance - Assessment of Observance of the CPSS-IOSCO Principles for Financial Market Infrastructures (IMF 13/345) Source: IMF
PwC 40
Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Asia (cont’d)
Singapore: MAS actively engaging financial institutions in IT security Singapore: MAS actively engaging Globally, financial institutions (FIs) have been facing an increasing number and variety of cyber threats. financial institutions in IT security The Monetary Authority of Singapore (MAS) has been actively engaging Standard Chartered Bank (SCB) on the theft of some of its clients’ bank statements. The theft occurred at a third party service provider which SCB engaged to print these statements. The bank has confirmed to MAS that this incident has not compromised the bank’s own IT systems or infrastructure.
MAS has reminded all FIs to heighten their vigilance to safeguard their IT systems and customer information, including controls at third party service providers. MAS is paying special supervisory attention to FIs’ compliance with MAS’ requirements for IT outsourcing.
Source: MAS
Singapore: Singapore’s Anti- Singapore: Singapore’s Anti-Money Laundering and Counter Financing of Money Laundering and Counter Terrorism Regime assessed to be robust Financing of Terrorism Regime The Monetary Authority of Singapore (MAS) has released the National Risk Assessment (NRA) report on assessed to be robust Money Laundering and Terrorist Financing Risks. The assessment found that many sectors have in place a robust regime to combat money laundering and terrorist financing. The regime is grounded in tough regulations, rigorous supervision, and effective enforcement. There are a number of areas where controls need to be strengthened, and efforts are underway to address them. The report takes into assessment Singapore’s economic and geographical environment; its legal, judicial and institutional framework; as well as crime trends. Emerging risks have also been identified for further study.
Source: MAS
PwC 41 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Asia (cont’d)
Japan: Publication of summary discussions of the study group on Japan: Publication of summary regulation of financial benchmarks discussions of the study group on regulation of financial benchmarks The Study Group on Regulation of Financial Benchmarks was organized in the Planning and Coordination Bureau of the Financial Services Agency in Japan. This was aimed for international developments related to financial benchmarks.
In view of the critical role played by financial benchmarks in Japan’s financial and capital markets, the Study Group expects that the accuracy and credibility of such benchmarks will be ensured by designing an appropriate regulatory framework.
Source: FSA
Japan: The Panel for vitalizing Financial and Capital Markets releases its Japan: The Panel for vitalizing recommendations Financial and Capital Markets The Financial Services Agency (FSA) has released recommendations for Vitalizing Financial and Capital releases its recommendations Markets in Japan. The FSA Panel for vitalizing financial and capital markets was set up on November 11th by the Financial FSA and the Ministry of Finance. This was aimed to implement the government’s Growth Strategy for Japan’s Economic Revitalization. The strategy states that “the government will compile, by the end of this year, measures to make Japanese financial and capital markets more attractive, such as measures to divert individuals’ financial assets as financing for growth, and measures to realize and utilize the potential of Asian economies.”
Source: FSA
PwC 42 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
4. Overseas developments – Asia (cont’d)
India: SEBI panel prescribes tougher norms on insider trading India: SEBI panel prescribes The Securities and Exchange Board of India (SEBI) panel on Insider Trading Regulations has made a range tougher norms on insider trading of recommendations to the legal framework for prohibition of insider trading in India. The panel has recommended widening the definition of 'insider trading', with plans to include company employees, directors, their immediate relatives and public servants handling market sensitive information.
Under the proposals, trades by stakeholders, employees, directors and their immediate relatives would also need to be disclosed internally to the company. The panel has recommended that trades within a calendar quarter of a value beyond Rs 10 lakh would be required to be disclosed to the stock exchanges.
Source: The Hindu
India: ‘Set up State finance regulatory panel’ The Reserve Bank of India (RBI) Committee has recommended that a State Finance Regulatory India: ‘Set up State finance Commission (SFRC) could be created into which all the existing State Government-level regulators could regulatory panel’ be merged. Functions such as the regulation of non-government organisations, microfinance institutions and local money services business could be added on to the SFRC. This would ensure regulatory functions work together. Source: Business Line
PwC 43 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
5. PwC publications
PwC AUS: 17th Annual Global CEO Survey PwC AUS: 17th Annual Global CEO Survey The results from PwC’s 17th Annual Global CEO Survey provides some clues about our relatively subdued outlook as well as insights about where Australia’s CEOs are leading the world and getting it right . This year, an Australian report of the data has been produced.
The Australian subset of the Global CEO Survey reveals there is much for Australia’s CEOs to be proud about. but there is also much still to do to take advantage of a re-emerging global economy and our unique place in the Asia region.
For a copy of the publication, please contact Yuan Pang at [email protected]
PwC US: FS Regulatory Brief - PwC US: FS Regulatory Brief - Insurers - Is federal regulation coming? Insurers - Is federal regulation The PwC document provides highlights from the Federal Insurance Office's (FIO) recently released report coming? on modernising the system of US insurance regulation covering the insurance industry's key regulatory concerns and FIO recommendations. It also provides our view of next steps for insurance companies.
For a copy of the publication, please contact Yuan Pang at [email protected]
PwC US: Volcker Rules changes after “final” rule is unveiled PwC US: Volcker Rules changes after “final” rule is unveiled This PwC publication provides an update on some recent changes to the Volcker rule as it relates to collateralised debt obligations of trust preferred securities, as well as some analysis on the rule's restrictions on certain collateralised loan obligations.
For a copy of the publication, please contact Yuan Pang at [email protected]
PwC 44 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
5. PwC publications
PwC US: Basel leverage ratio: No cover for US bank PwC US: FS Regulatory Brief – Basel This PwC publication discusses the Basel Committee on Banking Supervision (Basel Committee) issuing leverage ration: No cover for US bank the near final version of its leverage ratio and disclosure guidance (B3LR) in January 2014.. The B3LR makes a number of significant changes to the Basel Committee’s June 2013 consultative paper (Consultative Paper) by easing the approach to measuring the exposures of off-balance sheet items.
These changes address the industry’s concern that the Consultative Paper’s definition of exposure was too expansive (i.e., the leverage ratio’s denominator was too large).
For a copy of the publication, please contact Yuan Pang at [email protected]
PwC UK: CBI/PwC Financial Services Survey December 2013 PwC UK: CBI/PwC Financial Services Survey December 2013 PwC’s 97th CBI/PwC Financial Services Survey shows confidence reaching an all-time high, as the industry enjoys the fruits of economic recovery. Business and profitability are strengthening fast, and firms anticipate further growth. In response, they are increasing their levels of headcount and investment.
Increasing demand does not mean that incumbents will have things all their own way. The threat from new entrants is growing, and competition in the industry remains intense. Firms are also increasingly concerned about another type of competition – for talented staff.
The majority of those surveyed see the split of prudential and conduct regulation as a driver of higher costs. Even so, there are some signs that firms are becoming more adept at striking a balance between regulation and growth.
For a copy of the publication, please contact Yuan Pang at [email protected]
PwC 45
Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
5. PwC publications (cont’d)
PwC UK: EMIR clearing obligation & CCP impact PwC UK: EMIR clearing obligation & This PwC publication discusses the European Markets and Infrastructure Regulation (EMIR) introducing a CCP impact new regulatory regime for derivative end users. It also introduces a new Pan-European regulatory regime for central counterparties (CCPs). The PwC report provides an overview of the EMIR central clearing obligation, an explanation of what CCPs do and discusses expected benefits and risks of increased central clearing.
For a copy of the publication, please contact Yuan Pang at [email protected]
PwC Global: A practical guide to IAS PwC Global: A practical guide to IAS 32 for investment funds 32 for investment funds The updated PwC IAS 32 practical guide for investment funds has been published. The guide includes
some new questions and answers on financial instruments issued by limited life funds as well as questions and answers on debt/equity classification in consolidated financial statements.
For a copy of the publication, please contact Yuan Pang at [email protected]
PwC 46 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to?
5. PwC publications (cont’d)
PwC HK: Banking Newsletter – PwC HK: Banking Newsletter – Analysis of China’s Top 10 Listed Banks Analysis of China’s Top 10 Listed Results for the Third Quarter of 2013 Banks Results for the Third Quarter of This PwC newsletter presents the financial results and operating performance of the top 10 listed banks in 2013 the first three quarters of 2013, ranked by total assets as at 31 December 2012. The total assets and total net profits (for the three quarters of 2013) accounted for around 77% of total assets and total net profits of China’s overall commercial banking sector.
For a copy of the publication, please contact Yuan Pang at [email protected]
PwC HK: Chinese Bankers Survey PwC HK: Chinese Bankers Survey 2013 2013 The fifth edition of this survey, prepared jointly by the China Banking Association (CBA) and PwC China represents the views of 66 banks in China. It highlights the perspectives of Chinese bankers to fundamental changes affecting the industry, as well as their plans to respond proactively to the rapidly changing environment.
For a copy of the publication, please contact Yuan Pang at [email protected]
PwC 47 Contacts
Nicole Salimbeni Partner
E: [email protected] P: (02) 8266 1729
Edwina Star Director
E: [email protected] P: (02) 8266 4940
48 www.pwc.com.au
© 2014 PricewaterhouseCoopers. All rights reserved. PwC refers to the Australian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. Liability is limited by the Accountant’s Scheme under the Professional Standards Legislation. PwC Australia helps organisations and individuals create the value they’re looking for. We’re a member of the PwC network of firms in 158 countries with close to 169,000 people. We’re committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.au WL127000352