KPMG makes note of Key Risk and Regulatory Developments
KPMG has released a summary of relevant risk management or regulatory developments within the local markets.
Written by Paul McSheaffrey, the piece’s opening acknowledges the significant impact to many based in Hong Kong from Covid-19, and the changes it has imposed. Many of these changes are temporary, writes McSheaffrey but some of them, namely increasingly flexible working arrangements, could become normalised.
In a regulated industry this will pose some interesting new challenges for firms and regulators to work through, noting a need to accept some of these changes and move forward rather than trying to go back to the ‘old way’.
Another by-product of these challenging times is that many firms will now have challenges in meeting regulatory deadlines or requirements, and there has been some evidence of firms approaching regulators for forbearance. The good news is regulators are listening and are open to some, but probably not all, of these requests.
Moving on from Covid-19, Data standards are discussed, as the SFC is seeking to standardise the data that Licensed Corporations need to hold and produce, on request, during examinations. KPMG see this as part of a growing trend as regulators take a more data-based approach to regulation as well as using more technology.
The second topic brought forward is that of pricing and disclosure, noting that part of the ongoing focus conduct by regulators is looking at pricing. The origin of this is to improve practices in Private Banking but the principle equally applies to investment sales in retail banking and also sales of OTC financial products to Corporate and Institutional customers.
Next to be discussed is Sales and MPF Product sales, namely the fact that the continuing the focus on Conduct is new guidance from HKMA on sales of these products. The summary notes the HKMA survey circulated in November 2019 on reform of interest rate benchmarks to collate information on the progress made to date by Authorised Institutions in their preparation to transition to alternative reference rates.
KPMG then notes upcoming LIBOR reform, expressing that many who participated in a survey are not ready and discusses how the focus of regulators is moving to ensure institutions are taking action now.
Finally, Virtual assets and related service providers are becoming more mainstream and KPMG examine some of the recent guidance issued by Hong Kong’s regulators.
The full newsletter summary can be found HERE.
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