Greg Kilminster
Head of Product - Content
ASIC takes legal action against ASX over misleading statements
The Australian Securities and Investments Commission (ASIC) has initiated legal action against the Australian Securities Exchange Ltd (ASX) in the Federal Court, alleging that ASX made misleading statements regarding its Clearing House Electronic Subregister System (CHESS) replacement project. ASIC claims that ASX’s announcements on February 10, 2022, stating that the project was “on-track for go-live” in April 2023 and was “progressing well” were deceptive.
ASIC alleges that these statements implied that the project was following ASX’s announced project plan and was on course to meet future milestones, including the April 2023 “go-live” target. However, ASIC argues that these representations were misleading and deceptive because, at the time of the announcements, the project was not on track as stated, and ASX lacked a reasonable basis to imply that it was on course to meet future milestones.
At this point, ASIC has not yet determined the penalty it will seek for ASX’s alleged contraventions.
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FRC seeks input on the future of digital reporting in the UK
The Financial Reporting Council (FRC) has released a discussion paper (DP) focused on the future of digital reporting in the UK. The DP specifically examines potential changes to the policy landscape affecting digital reporting.
Some context
Since 2011, UK regulators, agencies, and government departments have increasingly mandated the digital reporting of financial and non-financial information using XBRL and, later, iXBRL. This includes recent mandates such as the Economic Crime and Corporate Transparency Act 2023 and the comprehensive digital mandate for all submissions to Companies House outlined in the Corporate Transparency and Register Reform white paper.
The FCA Disclosure and Transparency Rules also now require IFRS financial statements within annual financial reports to be published in a structured digital format and filed in the FCA’s National Storage Mechanism (NSM).
This DP is an opportunity for UK regulators to explore future changes to their digital filing requirements.
Key takeaways
Key topics covered in the DP include:
- Potential alternatives to the European Single Electronic Format (ESEF) taxonomy for UK regulated markets
- Proposed changes to structured digital reporting to support regulatory disclosure initiatives
- Considerations for mandatory assurance of digital tagging
- The impact of "full tagging" requirements on companies and charities
- Strategies to support stakeholders in adapting to new digital reporting requirements
Next steps
The deadline for feedback is 1 November 2024.
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EBA publishes final draft RTS on market risk
The European Banking Authority (EBA) has finalised amendments to its Regulatory Technical Standards (RTS) on the fundamental review of the trading book (FRTB) to bring it in line with the Capital Requirements Regulation (CRR3) as part of the EU Banking Package implementation.
Some context
The CRR3 introduced a number of changes to the FRTB and included mandates for the EBA to amend existing RTS for them to fit with the new Level 1 text. Specifically, the EBA was mandated to review the RTS on the treatment of foreign exchange and commodity risk in the banking book, the RTS on profit and loss attribution test, and the RTS on risk factor modellability assessment.
Key takeaways
The draft RTS specifies:
- Profit and loss attribution test (Article 325bg): The RTS remove the aggregation formula for computing the total own funds requirements for market risk for an institution using the alternative internal model approach as this formula has been now introduced in the CRR3.
- Risk factors’ modellability assessment (Article 325be): The RTS ensure that institutions are able to identify how far they rely on a third-party vendor for the purpose of assessing the modellability of a risk factor.
- Treatment of foreign exchange and commodity risk in the non-trading book (Article 325): The RTS ensure that translation risk is duly captured by institutions.
Next steps
The RTS will come into force 20 days after publication in the Official Journal of the European Union.
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EBA releases 2025 EREP report
The European Banking Authority (EBA) has released the European Resolution Examination Programme (EREP) Report. This report outlines the main areas of focus for resolution authorities (RAs) in the upcoming year (EREP 2025) and evaluates how the key topics identified in the EBA's 2023 European Resolution Examination Programme were incorporated into the work of RAs.
Some context
The EREP is a program introduced by the EBA in 2021 to promote convergence of resolution practices in the EU. It directs the attention of RAs to priority topics important to resolution work and assesses the convergence of RAs practices, ultimately driving convergence in the related resolution work across the EU.
Key takeaways
In 2023, the EBA prioritised four areas of focus for RAs:
- Addressing minimum requirement for own funds and eligible liabilities (MREL) shortfalls.
- Enhancing management information systems for valuation.
- Managing liquidity needs in resolution.
- Operationalising the bail-in tool.
For 2025, the key topics identified in the EREP include:
- The operationalisation of resolution strategies.
- Management information systems for valuation.
- Operationalisation of liquidity strategies in resolution.
Although the MREL priority is not listed as a separate key topic for 2025, it has been integrated into the key topic of operationalisation of the bail-in tool. Quantitative aspects will continue to be monitored through the EBA MREL Dashboard.
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HKMA issues Q&As on market and CVA risk under BCR
The Hong Kong Monetary Authority (HKMA) has published a set of Q&As regarding the revised market risk and credit valuation adjustment (CVA) risk capital frameworks under the amended Banking (Capital) Rules (BCR).
These Q&As aim to ensure a consistent understanding and implementation of the updated Part 8 or Part 8A of the BCR. The HKMA will continue to provide updates and additional guidance as necessary to address common interpretative issues and incorporate further guidance from the Basel Committee. Authorised institutions are encouraged to submit any questions they may have to the HKMA for further clarification. The new market risk and CVA risk capital framework will come into effect on 1 January 2025.
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HKMA launches sandbox for AI in finance
The Hong Kong Monetary Authority (HKMA) has unveiled a new sandbox environment to encourage responsible innovation in generative artificial intelligence (AI). The initiative, launched at the FiNETech2 conference, aims to support banks in piloting AI applications while mitigating risks.
The sandbox will provide banks with access to technical assistance and supervisory feedback as they experiment with AI-powered solutions for risk management, fraud prevention, and customer service. Eddie Yue, chief executive of the HKMA, described the sandbox as a “pioneering initiative” that will help unlock the full potential of AI in the financial sector.
The regulator is also stepping up efforts to build AI expertise within the industry, including training programmes and the sharing of best practices. As part of its broader fintech agenda, the HKMA plans to host additional FiNETech events focused on green technology and distributed ledger technology.
In conjunction with several other initiatives, including Project Ensemble and the e-HKD, the launch of the AI sandbox emphasises Hong Kong’s ambition to position itself as a leading fintech hub. By fostering a supportive environment for innovation, the HKMA is seeking to drive the adoption of cutting-edge technologies in the city’s financial sector.
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ASIC Commissioner issues ultimatum to superannuation funds
In a speech at the Conexus Institute Retirement Conference, Simone Constant, Australian Securities and Investments Commission (ASIC) Commissioner, delivered a stark message to the industry: “Our patience is running thin”. She demanded swifter action to improve member services and deliver better retirement outcomes.
ASIC is increasingly focused on ensuring consumers are confident and informed participants in the economy, and superannuation is a key battleground. With the number of retirees set to swell in the coming years, the regulator is determined to hold the industry to account.
Constant accused funds of failing to prioritise member needs, despite repeated calls for action. She highlighted a surge in complaints about delayed death benefit claims as evidence of the industry’s shortcomings.
To improve, funds must become more transparent, accountable, and member-focused. This means using data effectively to understand member needs, setting clear performance targets, and improving communication.
ASIC is also demanding greater accountability from fund boards, insisting they have the right skills and oversight to deliver strong retirement outcomes. “You can’t manage what you can’t measure,” Constant said.
The regulator is particularly concerned about the digital experience offered by funds. Websites must be accessible, informative and customer-friendly, especially at times of need.
Constant concluded by praising those funds already making progress but warned that underperformance will not be tolerated. ASIC will use its full powers to enforce compliance and protect consumers. The industry faces a clear challenge: adapt or face the consequences.
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