CUBE RegNews: 23rd September

Eva Dauberton

Eva Dauberton

News Editor

FRC issues revised insurance technical actuarial standard 


The Financial Reporting Council (FRC) has released version 2.0 of Technical Actuarial Standard 200: Insurance (TAS 200). 

Notably, the update includes changes to support practitioners in considering the implications for actuarial work relating to the Financial Conduct Authority (FCA)’s Consumer Duty principles. 


Key takeaways 

Key changes include: 

  • Introduction of new provisions to support practitioners in considering the implications for technical actuarial work of regulatory obligations related to customer outcomes, such as the FCA’s Consumer Duty principle. 
  • Removal of provisions already covered in the General Actuarial Standards (TAS 100) version 2.0. 
  • Revisions to address known gaps in the quality of technical actuarial work related to insurance transformations, audit, and assumptions setting. 


The FRC has also made several drafting amendments to the final standard TAS 200 version 2.0 to address the feedback received, particularly in relation to structure, syntax, and the inclusion of a glossary in line with TAS 100 version 2.0.   


Next steps 

TAS 200 version 2.0 will apply to all technical actuarial work in scope issued on or after 1 January 2025. 


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

 

SEC approves shortened municipal securities trade reporting timeframe 

 

The Municipal Securities Rulemaking Board (MSRB) has received approval from the Securities and Exchange Commission (SEC) for amendments to MSRB Rule G-14 to shorten the timeframe for reporting trades in municipal securities to the MSRB. 

This change is aimed at enhancing regulatory consistency and reducing potential compliance violations resulting from inconsistent application of standards by market participants when executing and reporting various types of transactions in fixed income. 


Key takeaways 

Changes include: 

  • Establishment of a baseline one-minute trade reporting requirement for most trades 
  • Creation of two new intraday exceptions and maintenance and clarification of all existing exceptions to the prior 15-minute reporting requirement, as well as the 15-minute reporting requirement for trades conducted outside the trading day. 
  • Requirement for trades to be reported as soon as practicable, with limited exceptions, and for dealers to adopt policies and procedures in connection with this requirement. 
  • Requirement for dealers reporting any trade with a manual component to use a new special condition indicator when the trade is reported to the MSRB. 


Next steps 

MSRB will announce the effective date of the rule change in a future MSRB notice. Manual trades will be subject to a phase-in period to an eventual 5-minute standard over several years. 

 

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

 

CFTC approves final guidance regarding the listing of VCC derivative contracts 


The Commodity Futures Trading Commission (CFTC) has approved final guidance that outlines the factors that designated contract markets (DCMs) should consider when dealing with specific provisions of the Commodity Exchange Act (CEA) and CFTC regulations regarding the listing of voluntary carbon credit (VCC) derivative contracts for trading. The aim of this guidance is to promote transparency and liquidity in the emerging VCC derivatives market. 


Key takeaways 

The guidance specifically covers the following provisions: 

  • Core Principle 3: This principle provides that a DCM shall only list for trading derivative contracts that are not readily susceptible to manipulation. The guidance outlines certain relevant considerations for a DCM when developing contract terms and conditions, and providing supporting documentation and data in connection with the submission of a contract to the CFTC. 
  • Core Principle 4: This principle requires a DCM to prevent manipulation, price distortion, and disruptions in the physical delivery or cash settlement process through market surveillance, compliance, and enforcement practices. The CFTC believes that monitoring the terms and conditions of physically settled VCC derivative contracts should include ongoing monitoring of the appropriateness of the contract’s terms and conditions, including updates to reflect the latest certification standards applicable to the underlying VCC. 
  • Product submission provisions outlined in CEA section 5c(c) and Part 40 of the CFTC regulations: The guidance highlights three submission requirements in relation to the listing of VCC derivative contracts. 

 

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

 

CFPB proposes narrow amendments to remittance transfer rule 

 

The Consumer Financial Protection Bureau (CFPB) has issued a proposed rule with a narrow amendment to disclosure requirements for certain international money transfers or remittances in accordance with the Electronic Fund Transfer Act and Regulation E. 

  

The proposed rule aims to amend certain disclosures to clarify that consumers should contact their remittance company for issues specific to their money transfer. These issues may be better handled by their remittance company before contacting the CFPB or the relevant state regulator. 


The deadline for feedback is 4 November 2024. 


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

 

SFC and HKMA survey shows growth in investment products trade 

 

The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) have released the findings of a survey on the sales of non-exchange-traded investment products by licensed corporations (LCs) and registered institutions (RIs). 


Underlying data  

The survey, which had a high response rate of over 99%, targeted 2,310 LCs and 112 RIs licensed or registered for Type 1 (dealing in securities), Type 4 (advising on securities), or both regulated activities. It covered the sale of non-exchange-traded investment products from 1 January to 31 December 2023 by respondent firms to non-professional investor clients, individual professional investors (PIs), and certain corporate PIs. 


Key takeaways  

Key findings of the survey include: 

  • A 14% increase in total transaction volume, reaching $4,338 billion in 2023 compared to $3,799 billion in 2022. 
  • Improved market sentiment resulting from the recovery from the pandemic, easing inflationary pressures, and anticipation of the end of the monetary tightening cycle in major economies. 
  • An increase in the number of firms engaged in the sale of investment products, with the figure rising from 371 in 2022 to 380 in 2023. 
  • The growth in sales of investment products was primarily driven by an increase in the sales of collective investment schemes (CIS) (up $394 billion), debt securities (up $80 billion), and structured products (up $59 billion). 
  • Structured products remained the most popular product type sold by respondent firms, followed by CIS and debt securities. 
  • The transaction amount of equity-linked products accounted for 61% of all structured products sold in 2023, an increase from 53% in 2022. 
  • The major underlying equities of the top five products sold by the large firms were from the internet (29%), automotive (27%) and technology (20%) sectors. 
  • There was an upward trend in the use of online platforms for distributing investment products. 

 

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

 

HKMA encourages firms to join GenAI sandbox 

 

The Hong Kong Monetary Authority (HKMA) has issued a circular encouraging authorised institutions to apply for participation in the Generative Artificial Intelligence (GenAI) sandbox. 


This initiative, announced by the HKMA in collaboration with the Hong Kong Cyberport Management Company Limited (Cyberport) in August 2024, aims to provide a risk-controlled environment for AIs to develop, test, and pilot innovative artificial intelligence-based solutions in real-world banking scenarios. 

Applications for the first cohort of the GenAI sandbox are now open and will be accepted until 15 November. 

 

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

 

APRA issues remade APS 117 on Bank Interest Rate Risk 


The Australian Prudential Regulation Authority (APRA) has issued the remade Prudential Standard APS 117 Capital Adequacy: Interest Rate Risk in the Banking Book (Advanced ADIs) (APS 117) as part of the revisions to the framework on Interest Rate Risk in the Banking Book (IRRBB). This serves as a transitional measure until the final amended APS 117 is effective on 1 October 2025. 


Some context 

On 8 July 2024, APRA published a response to submissions received during its December 2023 consultation on IRRBB revisions. The revisions result in a final APS 117 taking effect in October 2025. To ensure a smooth transition, APRA proposed to leave the current APS 117 unchanged until 1 April 2025 and then remake it so that it continues to apply until the final revised APS 117.


The deadline for feedback on this proposal was 9 August 2024. APRA received no submissions in response to this proposal. 

 

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