FSB Consults on Outsourcing and Third-party Relationships

The Financial Stability Board (FSB) has published a discussion paper for public consultation on Regulatory and Supervisory Issues Relating to Outsourcing and Third-Party Relationships. Coverage includes the financial sector’s response to COVID-19, which highlighted benefits and challenges of managing the risks of financial institutions’ interactions with third parties, and common concerns about the possibility of systemic risk arising from concentration in the provision of some outsourced and third-party services to financial institutions. Responses to the discussion paper must be submitted by January 8, 2021.

Singapore Offers Grants to Support RegTech Uptake

The Monetary Authority of Singapore (MAS) has launched a $26m Productivity Solutions Grant (PSG) designed to help smaller financial services firms adopt technology aimed at streamlining their regulatory data reporting. Although currently only available to banks, the regulator hopes to expand the program to insurers and capital markets intermediaries. The funding will be used to purchase and implement digital solutions from a list of pre-approved managed services providers.

Sopnendu Mohanty, chief fintech officer at the MAS, says: “The co-funding support for the adoption of regulatory reporting solutions will help smaller financial institutions leverage technology to better meet regulatory obligations.”

Bloomberg Adds Credit Benchmark Data

Bloomberg will make Credit Benchmark’s credit risk data, derived from risk views of large financial institutions, available on the Bloomberg Terminal and to license for enterprise use cases. The anonymised consensus data adds to existing credit risk datasets and risk indicators, providing complementary content to help market participants assess the credit quality or risk of default of a counterparty, company or entity, all integrated within their existing workflows. Credit Benchmark data can help support risk management, loan and debt underwriting, portfolio optimisation, supply chain risk management, investment idea generation, and is a means of assessing ongoing credit quality.

DSB Expands Regional Expertise of Technology Advisory Committee Working on UPI

The Derivatives Service Bureau (DSB) has fulfilled plans to expand regional representation of its Technology Advisory Committee (TAC) working on the development of the Unique Product Identifier (UPI). A new two-year term of the TAC begins today, under the auspices of new chair Chris Pulsifer, a software development manager from Bloomberg, and including six members based in Asia, one in the Middle East and North Africa region, 10 in North America, and 13 in Europe. The UPI has, to date, been acknowledged by regulators including the CFTC and ESMA. More are expected to follow in coming months.

Morgan Stanley Slapped with $10m in Fines

The US Securities and Exchange Commission has issued Morgan Stanley with a $5 million penalty, citing violations of Regulation SHO, the regulation governing short sales. “Morgan Stanley hedged synthetic exposure to swaps by purchasing or selling the securities referenced in the swaps, and it separated its hedges into two aggregation units—one holding only long positions, and the other holding only short positions,” said the SEC. Morgan Stanley was therefore able to sell its hedges on the long swaps and mark them as “long” sales without concern for Reg SHO’s short sale requirements.

Morgan Stanley neither admitted nor denied the findings, but has accepted the fine and consented to a cease-and-desist order. Separately, the bank also this week received a $5 milion fine from the Commodity Futures Trading Commission for failing to comply with swap data reporting obligations.

ESMA Appoints New Chair of CCP Supervisory Committee

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has formally appointed Klaus Löber as Chair of the CCP Supervisory Committee and Nicoletta Giusto and Froukelien Wendt as Independent Members. “The new organisational set-up of the CCP Supervisory Committee will strengthen ESMA’s role in enhancing the safety and efficiency of CCPs both in the EU and in third countries,” said Chairman Steven Maijoor.

The Chair and Independent Members will play an important role in light of the additional regulatory powers granted to ESMA, regarding the supervision of third country CCPs and convergence in the supervision of EU CCPs.

ESMA to Recognise Three UK CCPs Post Brexit

In the latest Brexit news, ESMA has confirmed that the three central counterparties (CCPs) in the UK – ICE Clear Europe, LCH and LME Clear – will be recognised as third country CCPs eligible to provide services in the EU after December 31, 2020. The EC has adopted an equivalence decision that will make the UK CCPs equivalent for 18 months. The equivalence decision is the first of several conditions to be met for recognising a third country CCP under EMIR, including the establishment of cooperation arrangements with home supervisors.

AML Specialist SmartSearch Slams FinCen Leak

John Dobson, CEO at AML experts SmartSearch, has expressed outrage at the revelations contained in the FinCEN files of criminal cash being moved around by the world’s biggest financial institutions, including the UK’s HSBC. “This is nothing short of a betrayal for all those thousands of businesses doing their bit in the global fight against money laundering and financial fraud,” he said.

“If these documents can be believed, one of the world’s biggest banks has effectively turned a blind eye and enabled criminals to take full advantage. These revelations couldn’t have come at a worse time of course, with so many businesses reeling from the ongoing affects of the Covid 19 pandemic, and the extra security threats that has created. Events like these are hugely damaging for the banks involved but also for all the other banks who are trying to stamp out money laundering, and it cannot go unpunished.”

AxiomSL Expands in Europe with New Confinale Partnership

AxiomSL has partnered with Confinale, an IT consulting and software development company specializing in the banking sector, in a move intended to expand the firm’s presence in Switzerland, Germany and Liechtenstein. The collaboration will provide clients including the Swiss National Bank, Financial Markets Authority Liechtenstein, and Bank Centrale du Luxembourg with AxiomSL’s end-to-end risk and regulatory reporting solutions via Confinale’s integration ecosystem. The announcement comes just a few days after VP Bank, one of Liechtenstein’s largest banks, selected AxiomSL’s ControllerView platform as the foundation for compliance across its key centres of operation: Liechtenstein, Luxembourg, Singapore and Switzerland.

SEC Approves Final Rules on Proxy Advisors

The US Securities and Exchange Commission has voted to adopt new rules requiring proxy advisors to provide companies with access to their voting advice at the same time as shareholders, following a protracted battle over the regulation of investment firms that has spanned several years. According to the SEC the new rules – which also tighten disclosure requirements for proxy advisors – will ensure that shareholders have “reasonable and timely access to more transparent, accurate and complete information on which to make voting decisions.”