Global edition

Financial services regulation: Adapting to change

The study examines whether or not the FCA is responding to the changes that the financial services sector is undergoing. 

The evaluation is based on good-practice principles of effective regulation and criteria for performance measurement by regulators. 

The national audit Office has identified and focused on the key processes for managing changes, and examines how the FCA is responding to changes in its regulatory powers and remit:

• the changes to the financial services landscape

• whether the FCA has the tools and resources it needs to identify and respond to change

• how the FCA measures, reports and learns from its performance.

As this report is focused on how the FCA is responding to changes, nor does it review how the FCA has managed individual regulatory decisions or cases.

December 2023

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ISDA Create an online solution to produce deliver and negotiate legal document for the derative market 

International Swaps and Derivatives Association create an online solution that will, among other things, allow firms to produce, deliver, negotiate and execute documents and capture, process and store data. 

The platform is being jointly developed by ISDA and Linklaters, and  will allow firms to automate the creation and delivery of initial margin (IM) documentation, and negotiate and execute IM documentation with multiple counterparties simultaneously. 

December 2023

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FCA Expectation for welth Management & Stock Broking Firms

FCA release a new Letter to CEO. 

The document anticipates the authority pressing themes for the foreseeable months. 

This time, the sector under the spotlight are: Wealth Mangers and Stockbrokers.

In this market compose by 1.8 million portfolios and 14.3 million of stockbroking accounts, the authority it is vigilant in preventing the allocation of inappropriate and high-risk – complex investments. 

Unlikely, Firms must expect a more intrusive, proactive approach from the authority, that may lead to unannounced visit. 

As usual, firms must tide up their department to avoid unexpected sanctions, reviewing and implementing the most expose area: 

1.  Operational Resilience 

2.  CASS

3.  ESG

4.  non-Financial Misconduct and Market abuse 

It is highly recommended introducing a more robust approach in: 

·  Preventing Financial Crime

·  Enhancing KYC

·  Training staff to identify & report 

·  Improving system & controls  

·  Recruiting experienced SMF 16/17 

·  Aligning to customer needs 

·  Assessing Vulnerability 

·  Ensuring Customer understanding 

·  Justifying complex or risky investments 

·  Assessing regularly charges & changes. 

Finally, an high grade of self-assessment it is requested accordingly with principle 11 

“A firm must deal with its regulators in an open and cooperative way, and must disclose to the FCA appropriately anything relating to the firm of which that regulator would reasonably expect notice.”

November 2023 

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The Payment Services Regulations 2017 has been up to date 

On the 14 of November 2023 the Payment Services Regulations 2017 (“the 2017 Regulations”) has been emended removing a limitation on the FCA power to make rules in relation to:  

·  authorised electronic money institutions 

·  small electronic money institutions 

·  authorised payment institutions 

·  small payment institutions

·  registered account information service providers. 

The amendments also extend the FCA existing powers to make rules for authorised persons in relation to: 

·  client money

·  the control of information

·  the appointment of auditors 

Furthermore, the new amendments require the FCA to have regard to the net zero emissions target as one of the regulatory principles applying to the exercise of its functions under the 2011 Regulations and the 2017 Regulations. 

In conclusion, the Payment Systems Regulator Limited, the body corporate established by the FCA under section 40(1) of Financial Services (Banking Reform) act 2013 would be in charge for issue directions to: 

·  providers of cash withdrawal services 

·  amend the Payment Card Interchange Fee Regulations 2015 

·  issue directions to operators of payment systems 

·  issue directions to operators of providing services to payment systems

·  elevate sanctions.

November 2023

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Published the Letter to the CEO from the Deputy Governor, of the Prudential Regulation Authority, suggesting Operational readiness for a zero or Negative Bank Rate

Since the financial crisis in 2008, interest rates in the UK and  elesewhere have reached historically low levels, and some central bank have implemented negative interest reates as a monetary policy tool. 

In Agust, the Bank of England's Monetary Policy Committee (MPC) noted that it would continue to assess the approppriateness of a negative official Bank Rate alongside all of its other tools.

For a negative Bank RAte to be effective as a policy  - would need to be operationally ready to implement it in a way that does not adversely affect the safety and soudness of firms. 

As highlighted in the September minutes of the MPC, the Bank of England (the Bank) and the Prudential Regulation Authority (PRA) are commencing structured angagement  on the operational coniderations of a negative policy rate.   

March 2021

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Crypto-assets public awareness, a fundamental paper for a better understanding further regulation of cryptoasset.

Abstract

The principal aim of the paper is to reveail insight into holdings of cryptoassets in UK and understand motivations for investing and attitudes/behavioural patterns towards cryptoassets. 

Through this survey, the authors Mercy Aju and Tim Burrell have discovered  that only 10% of respondents are holding cryptoassets in 2023 and  half of cryptoasset users hold less than £100 in cryptoassets. 

Most interesting it is the perceptions, for  most of the respondents the  common reason for purchasing cryptoassets is as "a gamble".

However this is a changing market and a continue monitor its necessary before changing the regulatory framework.

In conclusion even if an increasing awareness of cryptoassets it is present in the market, it should be noted that cryptoassets remain a high-risk investment and  predominantly sit outside of the FCA’s current regulatory perimeter. 

September 2023 

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