CUBE RegNews: 22nd April

Eva Dauberton

Eva Dauberton

News Editor

UK regulators consult on the future open banking entity 


The Joint Regulatory Oversight Committee (JROC) has released proposals for the future open banking entity - the Future Entity. The JROC is composed of the Financial Conduct Authority (FCA), the Payment Systems Regulator (PSR), the Competition and Markets Authority (CMA), and HM Treasury (HMT). 


Some context 

In March 2022, the FCA, PSR, CMA and HMT published a joint statement announcing the establishment of the JROC and their commitment to the future of open banking. The JROC has formed two working groups. One group is responsible for creating a framework for the expansion of variable recurring payments, while the other is tasked with designing the Future Entity. This entity will replace Open Banking Limited, the current central standard-setting body for open banking. 


Key takeaways 

The report sets out JROC recommendations regarding the Future Entity, including its structure, governance, and funding.

The report also includes recommendations for the immediate creation of an Interim Entity to exist in an interim regulatory phase before the full transition to the Future Entity occurs, along with the implementation of the regulatory framework. 


Next steps  

The deadline for feedback is 20 May 2024. 


Click here to read the full RegInsight on CUBE’s RegPlatform  


FCA publishes latest update on credit information sharing governance framework 


The Financial Conduct Authority (FCA) has published the latest Interim Working Group (IWG) work meeting minutes. The IWG aims to discuss arrangements for a new governance framework around credit information sharing. The FCA has also published the first IWG report. 


Some context 

The FCA conducted a Credit Information Market Study (CIMS), which found that current industry governance arrangements, the Steering Committee on Reciprocity (SCOR), are ineffective at driving change, prioritising consumer outcomes, and representing views from a range of stakeholders transparently. 

Consequently, the CIMS final report suggested forming a new industry body to oversee the sharing of credit information: the Credit Reporting Governance Body (CRGB). 


To assist with its development, the FCA, along with the industry, has formed the IWG. Through four phases, the IWG aims to provide recommendations on the design, implementation, and operation of the new CRGB. The first report was issued in April 2024 and addressed what the CRGB should do. 


Key takeaways 

During this IWG meeting, the participants discussed the second stage report topics covering how the CRGB will be constituted. The discussion covered: 

  • The preferred method of incorporating the CRGB as a legal entity. 
  • Governance principles, with a particular focus on the CRGB’s board structure. 
  • The funding of the CRGB. 


Next steps  

According to the terms of reference, the second report, set to be issued at the end of June 2024, will cover how the CRGB will be constituted. Report three, set to be published at the end of August 2024, will cover how the CRGB will operate.  

The fourth report, which will be published at the end of September 2024, will combine all recommendations, including the transition plan from SCOR.  


The next IWG meeting will be held on 9 May. 


Click here to read the full RegInsight on CUBE’s RegPlatform  


BoE and FCA revise MoU  


The Memorandum of Understanding between the Bank of England, in its capacity as the Prudential Regulation Authority, and the Financial Conduct Authority has been revised to align with the updated Financial Services and Markets Act 2023, streamline some of the processes, and update the terminology used. 


Click here to read the full RegInsight on CUBE’s RegPlatform  


UK Treasury Committee expresses concern over unfair debanking 


New figures released by the UK Parliament Treasury Committee reveal a significant surge in complaints related to debanking. According to the data, the number of complaints received by the Financial Ombudsman Service has risen by 69% since the 2020/21 financial year, with a 44% increase between 2022/23 and 2023/24. This includes 81% year-on-year increase in debanking complaints made by businesses. 


Harriett Baldwin, Chair of the Treasury Committee, expressed concern over the unfair debanking of legally operating businesses. She emphasised that banks should be providing support to small businesses instead of abruptly withdrawing their services. 


Click here to read the full RegInsight on CUBE’s RegPlatform  

 

SEBI proposes framework for share price discovery  


The Securities and Exchange Board of India (SEBI) has issued a consultation paper (CP) proposing a framework for price discovery of shares of listed Investment Companies (ICs) and Investment Holding Companies (IHCs) whose market price is at significant discount to book value.   


Some context 

Currently, shares of a few listed ICs or IHCs are getting traded infrequently but at a price significantly lower than the book value disclosed by the listed entities in their last audited financial statements. The valuation of such ICs or IHCs could be fairly high on account of growth in their investments in shares of other listed companies. 


To address this issue, SEBI held discussions with stock exchanges and certain ICs or IHCs to determine the extent of the problem and ways to facilitate effective price discovery in such companies. It was deemed necessary to review the existing framework and put in place the necessary mechanisms to provide an opportunity for fair and transparent price discovery. 


Key takeaways  

The CP includes proposals for a special call-auction mechanism without price band that may be enabled for listed ICs and IHCs whose shares are trading beyond a certain discount to their book value.   

The proposals cover:

  • The entities responsible for providing the special call-auction mechanism.  
  • Criteria for identification of ICs or IHCs eligible. 
  • The condition for the process initiation. 
  • The related timing and frequency. 


Next steps  

The deadline for feedback is 10 May 2024. 


Click here to read the full RegInsight on CUBE’s RegPlatform  


Hedge fund manager sentenced for running Ponzi scheme 


The founder, operator, and investment manager of Highguard Capital and its affiliated entities, Guardian Opportunity Fund and Guardian Opportunity Management, has been sentenced to one year and one day in prison. This comes after he was found guilty of running a Ponzi scheme that spanned several years and involved millions of dollars. 


Court documents reveal that Michael Wayne Williams convinced his victims to invest more than $3.6 million in Guardian Opportunity Management. Instead of using the funds as intended, he used them for undisclosed and unauthorised purposes. This included settling civil lawsuits against him for fraud and repaying investors from previously managed discontinued funds.  


Williams pleaded guilty to wire fraud in October 2023. 


Click here to read the full RegInsight on CUBE’s RegPlatform 

 

HKMA and SFC consult on FSP list under OTC derivatives regulatory regime 


The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) have published a joint consultation paper which updates the list of approved Financial Services Providers (FSPs) under the over-the-counter (OTC) derivatives regulatory regime. 


Some context 

To meet the G20 commitments to reform OTC derivatives markets, the HKMA and SFC have implemented a regulatory regime for OTC derivatives in Hong Kong. The regime provides for, among other things, the introduction of reporting, clearing, trading, and record-keeping obligations in respect of OTC derivative transactions. This consultation paper provides an update to the list of FSPs under the regime. 


Next steps 

The deadline for comments is 17 May 2024. 


Click here to read the full RegInsight on CUBE’s RegPlatform  


HKMA welcomes launch of “Credit Data Smart” 


The Hong Kong Monetary Authority (HKMA) has welcomed the announcement made today by various banking and money lending industry associations regarding the launch of "Credit Data Smart" on 26 April 2024. 


The introduction of "Credit Data Smart," an initiative that focuses on advancing data infrastructure and promoting fintech innovation in Hong Kong, marks a significant advancement in consumer credit reference services in the region. 


The initiative also aims to foster market competition, improve service quality, and mitigate operational risks associated with relying on a single commercial service provider, especially the risks linked to a single point of failure. 


Click here to read the full RegInsight on CUBE’s RegPlatform