From 2 October 2024, trustees and custodians of collective investment schemes (CIS) operating in Hong Kong and authorised by the Securities and Futures Commission (SFC) for retail distribution must be licenced or registered to carry on the new Type 13 regulated activity (RA13) of “providing depository services for a relevant CIS” (Depositaries). Nineteen Depositories have been licenced or registered for RA13 at this stage. Updates to the Code of Conduct for Persons Licensed by or Registered with the SFC (the Code of Conduct) and the Guidelines on Competence (the Guidelines) came into effect on 2 October 2024, following the publication of consultation conclusions by the SFC in March 2023. Amendments to the Securities and Futures Ordinance (SFO) together with subsidiary legislation also became effective on the same day. A new FAQ webpage is available on the SFC’s website. The scope of RA13 The new RA13 is triggered by (i) the custody and safekeeping of relevant CIS property; and (ii) the oversight of the relevant CIS to ensure that it is operated in accordance with its scheme documents, other than when such services are provided as a delegate or subdelegate of another depository. A “relevant CIS” is a collective investment scheme authorised under section 104 of the SFO, though depository services provided in respect of mandatory provident fund schemes (or constituent funds thereof) and approved pooled retirement funds (PRFs) that are offered only to one or more of professional investors, employers as defined by the Mandatory Provident Fund Schemes Ordinance (Cap. 485), and occupational retirement schemes are expressly excluded from the definition. Changes to the Code of Conduct The new Schedule 11 to the Code of Conduct sets out additional business conduct requirements that apply to Depositaries. Depositaries should implement policies and procedures to ensure they meet these requirements, though the SFC acknowledges that there can be no one-size-fits-all approach, and that the operations of the Depositary, the nature and volume of transactions undertaken and the nature of the relevant CIS property will help to determine what is appropriate. These additional requirements relate to internal controls, delegation, operations and monitoring (including as to subscriptions and redemption, valuation and NAV calculations, distributions, asset segregation and safeguarding). There is little that is unexpected or unusual in the updated Code of Conduct and we anticipate that many of the obligations will already be contractually incumbent on Depositaries. These changes enhance the existing regulatory regime, which has been described by the SFC as “patchy”, to bring Hong Kong in line with the approach for supervising trustees and custodians in other major financial centres, thereby increasing protection for investors.

On 7 October 2024, the Financial Conduct Authority (FCA) published a Dear CEO letter to firms whose primary business is financial advice or investment intermediation. The letter sets out a summary of the FCA’s priorities, its expectations of those firms, and the work it intends to do. The FCA highlights the important role played by financial advisers and investment intermediaries in helping consumers to make complex financial decisions, but notes that most people do not access traditional channels of support. It explains that this presents opportunities for firms to grow and serve new markets, as well as posing challenges and risks which could lead to harm to consumers and the market. To address these, the FCA wants to work with the industry to ensure consumers receive consistently good outcomes from a sector which is sustainable and well placed for the future, whilst also empowering more consumers to manage their finances. The FCA’s priorities In light of this, the FCA explains that its priorities over the next two years are to: Reduce and prevent serious harm, with a focus on retirement income advice, ongoing advice services, ensuring the ‘polluter pays’, and consolidation. Monitor and test higher industry standards under the Consumer Duty – it warns that CEOs should be able to evidence their firm has implemented the Duty and complies on an ongoing basis. Enable more consumers to pursue their financial objectives through the Advice Boundary Guidance Review – the FCA encourages firms to actively engage with it on the review and consider the opportunities it may provide to better support their clients. The FCA plans to underpin these priorities with: Increased industry engagement and collaboration across the UK, including through in-person events and keynote speeches, with the aim of gaining insights into the issues and challenges firms are seeing, helping shape the future regulatory proposals, and sharing the FCA’s expectations. A forward-looking and data-led approach, with the aim of maximising the power of data within the sector. As part of its engagement, the FCA plans to proactively seek views on what insights would be most useful to share from the data it has access to from firms across the sector, with a focus on data that is easily accessible to minimise the burden on firms. The FCA expects to follow up by issuing a survey to firms in 2025 to obtain these insights and aims to start retiring the collection of less valuable data. Updates and next steps Key updates set out in the letter include: The FCA is following up with firms on the findings of its thematic review of retirement income advice and carrying out further work to explore the scale of any issues identified and tackle any harms. It intends to publish further commentary on the retirement income advice market in Q1 2025. Having written to several firms earlier in 2024 requesting information about their delivery of ongoing advice, the FCA aims to provide a further update later in 2024 on its findings and next steps. The FCA expects CEOs to ensure their firms and any appointed representatives they oversee hold adequate financial resources to meet potential redress liabilities, and must not seek to avoid redress liabilities. It expects to outline its next steps on its Capital Reduction for Redress consultation (CP23/24) before the end of 2024. The FCA plans to undertake multi-firm work to review consolidation within the market. CEOs are expected to review the letter and consider how it applies to their firm, and the FCA reminds them that as CEO or Director, they are responsible for ensuring their firm meets FCA requirements.

On 3 October 2024, the FCA published Handbook Notice 122. This Handbook Notice describes the changes to the FCA Handbook and other material made by the FCA Board under its legislative and other statutory powers on 18 September 2024 and 3 October 2024. Where relevant, it also refers to the development stages of that material, enabling readers to look back at developmental documents if they wish. In summary the FCA Board approved the: Dispute Resolution: Complaints Sourcebook (Motor Finance Discretionary Commission Arrangement Complaints) (Amendment) Instrument 2024. This instrument follows CP24/15 and amends DISP App 5.1 and App 5.2 so to extend the pause on the requirement for firms to provide a final response to Discretionary Commission Arrangement complaints within 8 weeks, giving complainants the right to go to the Financial Ombudsman. Change in Control (Aggregation of Holdings) Instrument 2024. This instrument follows CP24/11 and amends SUP 11.3 and 11 Annex 6G. In particular, it replaces wording in SUP 11.3.1BG to refer readers to the final non-Handbook guidance in relation to the prudential assessment of acquisitions and increases in control. EU Withdrawal (Miscellaneous Amendments) Instrument 2024. This instrument amends various FCA sourcebooks including the Glossary, PRIN 3.1 and 3.3, SYSC 23 Annex 1, GEN 2.2, 4.3, 4 Annex 1B, TP 5 and TP 6, SUP 16.30 and PERG 13.1 and 13.2. The instrument removes expired provisions relating to the temporary permissions regime and the temporary marketing permissions regime and implements terminology changes from the Retained EU Law (Revocation and Reform) Act 2023. Technical Standards (Markets in Financial Instruments Transparency) (Transitional Provisions) Instrument 2024. This instrument follows CP24/10 and makes changes to the onshored versions of Commission Delegated Regulation (EU) 2017/577, Commission Delegated Regulation (EU) 2017/583 and Commission Delegated Regulation (EU) 2017/587. In summary, the changes extend the temporary regime which allowed the FCA to not have to follow the methodology prescribed in EU legislation for calibrating the regime of pre- and post-trade transparency for bonds and derivatives, pending the revision of the transparency regime which is expected to take effect towards the end of 2025.

4 October UK On 9 September 2024, the Financial Conduct Authority (FCA) published a Guidance Consultation, GC24/5, setting out proposed changes to its Payment Services and Electronic Money Approach Document to support new legislation to tackle authorised push payment (APP) fraud. The deadline for responses to GC24/5 is 4 October 2024. On 18 July 2024, the Bank of England (BoE) published two consultation papers on central counterparty (CCP) resolution – one relates to the BoE’s approach to determining commercially reasonable payments for contracts subject to a statutory tear up in CCP resolution, and the other concerns the BoE’s power to direct a CCP to address impediments to resolvability. The first consultation closes on 4 October 2024. 7 October UK On 19 December 2023, the Payment Systems Regulator (PSR) published a policy statement, PS23/4, on APP scams reimbursement. In this policy statement the PSR sets out the final detailed parameters of the new reimbursement requirement within Faster Payments and the legal instruments it is using to implement the policy. The PSR also confirms the policy start date of 7 October 2024. 8 October EU On 8 July 2024, the European Securities and Markets Authority (ESMA) issued two consultation papers on liquidity management tools (LMTs) for funds. The first consultation covers draft regulatory technical standards (RTS) on LMTs under the Alternative Investment Fund Managers Directive (AIFMD) and the UCITS Directive. The second consultation deals with draft guidelines on LMTs of UCITS and open-ended alternative investment funds (AIFs). The deadline for responding to both consultations is 8 October 2024. On 8 July 2024, the European Banking Authority (EBA) issued a consultation on draft RTS specifying the conditions and the criteria to assess whether the credit valuation adjustment (CVA) risk exposures arising from fair-valued securities financing transactions (SFTs) are material, as well as the frequency of that assessment. The deadline for comments on the consultation is 8 October 2024. 9 October Global On 9 July 2024, the Basel Committee on Banking Supervision published a consultative document on Principles for the sound management of third-party risk. The deadline for comments on the consultative document is 9 October 2024. 11 October UK On 6 September 2024, the FCA published Consultation Paper 24/18: Quarterly Consultation Paper No.45 (CP24/18). The deadline for comments on CP24/18 is 11 October 2024. On 5 August 2024, the House of Lords Financial Services Regulation Committee reopened its call for evidence on FCA Consultation Paper CP24/2: Our Enforcement Guide and publicising enforcement investigations—a new approach. The deadline for evidence is 11 October 2024. On 26 September 2024, the Department for Energy Security and Net Zero updated its webpage on the UK Emissions Trading Scheme (UK ETS): free allocation review by adding a note on extending the UK ETS first Free Allocation period to 2026. The note states that the UK ETS Authority is consulting operators in the scheme on a proposal to move the start of the second allocation period from 2026 to 2027, extending the current allocation period to include 2026. Operators will receive the consultation from their scheme regulator and have until 11 October 2024 to submit responses. EU On 15 July 2024, the EBA issued a consultation paper containing draft guidelines on templates to assist Member State competent authorities in performing their supervisory duties regarding issuers’ compliance under Titles III and IV of the Regulation on markets in crypto-assets (MiCAR). The deadline for comments on the consultation paper is 11 October 2024. On 8 July 2024, the ESMA issued a consultation on guidelines on the submission of periodic information to ESMA by benchmark administrators, credit rating agencies (CRAs) and market transparency infrastructures. The deadline for comments on the consultation paper is 18 October 2024. 12 October EU On 12 July 2024, the European Supervisory Authorities issued a consultation paper on guidelines on templates for explanations and opinions, and the standardised test for the classification of crypto-assets, under Article 97(1) of the MiCAR. The deadline for comments on the consultation paper is 12 October 2024. 15 October EU Commission Implementing Regulation (EU) 2024/2494 of 24 September 2024 laying down implementing technical standards (ITS) for the application of MiCAR with regard to standard forms, templates and procedures for the cooperation and exchange of information between competent authorities and EBA and ESMA enters into force on 15 October 2024. On 10 July 2024, ESMA published its third consultation paper on the future technical standards and technical advice on revised MiFIR and MiFID II. The deadline for comments on sections 5, 6 and 7 of the consultation paper is 15 October 2024. 16 October EU On 16 July 2024, the EBA issued a consultation paper on draft ITS amending Commission Implementing Regulation (EU) 2016/100 specifying the joint decision process with regard to the application for certain prudential permissions pursuant to the Capital Requirements Regulation (CRR). The deadline for comments on the consultation is 16 October 2024. On 16 July 2024, ESMA published a consultation paper on draft technical standards specifying the criteria for how investment firms establish and assess the effectiveness of their order execution policies. The deadline for comments on the consultation is 16 October 2024. On 24 July 2024, the European Central Bank (ECB) issued a consultation on a draft guide on governance and risk culture. The deadline for comments on the draft guide is 16 October 2024. 17 October UK On 8 August 2024, the FCA published Consultation Paper CP24/16: The Value for Money Framework (CP24/16). In CP24/16, the FCA is consulting on detailed rules and guidance for a new value for money framework for savers invested in default arrangements of workplace defined contribution pension schemes. The deadline for responses to CP24/16 is 17 October 2024. 18 October UK On 26 July 2024, the FCA published several policy papers designed to strengthen the UK’s capital markets. This included Consultation Paper 24/12: Consultation on the new Public Offers and Admissions to Trading Regime (CP24/12) and Consultation Paper 24/13: New regime for public offer platforms (CP24/13). The deadline for comments on CP24/12 and CP24/13 is 18 October 2024. On 18 July 2024, the BoE published two consultation papers on CCP resolution – one relates to the BoE’s approach to determining commercially reasonable payments for contracts subject to a statutory tear up in CCP resolution, and the other concerns the BoE’s power to direct a CCP to address impediments to resolvability. The second consultation closes on 18 October 2024. On 12 July 2024, the Financial Markets Standards Board (FMSB) issued a transparency draft of a proposed standard for sharing standard settlement instructions and an addendum. The FMSB invites comments by 18 October 2024. On 18 July 2024, the FCA published the results of its multi-firm review on the treatment of politically exposed persons, and launched a consultation (GC24/4) on proposed changes to its guidance on the subject. The deadline for responses to GC24/4 is 18 October 2024. EU On 8 July 2024, ESMA issued a consultation on guidelines on the submission of periodic information to ESMA by benchmark administrators, CRAs and market transparency infrastructures. The deadline for comments on the consultation paper is 18 October 2024. 21 October EU On 21 August 2024, ESMA announced that it had published the translations in all official EU languages of its guidelines on funds’ names using ESG or sustainability-related terms. Member State competent authorities must notify ESMA by 21 October 2024 whether they (i) comply, (ii) do not comply, but intend to comply, or (iii) do not comply and do not intend to comply with the guidelines. 28 October EU On 19 December 2023, ESMA published a final report on proposed updates to its guidelines on position calculation under EMIR Refit. The existing ESMA guidelines (ESMA70-151-1350) that were applicable as of 3 December 2018 were repealed on 29 April 2024 and replaced with the updated guidelines that apply from 28 October 2024, providing for a 6-month transition period. 30 October UK On 30 July 2024, the Prudential Regulation Authority (PRA) published Consultation Paper, CP11/24, on International firms: Updates to Supervisory Statement (SS5/21) and branch reporting (CP11/24). The deadline for responses to CP11/24 is 30 October 2024. EU On 30 July 2024, the EBA launched a public consultation on its draft ITS overhauling the EBA resolution planning reporting framework. The consultation runs until 30 October 2024. 31 October UK On 29 July 2024, the FCA launched a call for input on its review of FCA requirements following the introduction of the Consumer Duty. The deadline for responses to the call for input is 31 October 2024. On 30 July 2024, the BoE published a discussion paper on its approach to innovation in money and payments. The discussion paper asks for responses on “the next step in a wide-ranging conversation on how to deliver an ambitious agenda for the UK payments landscape”. The deadline for responses to the discussion paper is 31 October 2024. EU On 16 June 2023, the European Commission (the Commission) published a letter from John Berrigan, Deputy Director-General for Financial Stability, Financial Services and Capital Markets Union, addressed to Verena Ross, ESMA Chair, formally requesting technical advice on the review of Commission Directive 2007/16/EC on UCITS eligible assets (commonly known as the Eligible Assets Directive). The letter requests that ESMA deliver its technical advice to the Commission by 31 October 2024. On 31 July 2024, the EBA issued a public consultation on draft ITS for uniform reporting templates in relation to the level of charges for credit transfers and share of rejected transactions under the Single Euro Payments Area Regulation. The deadline for comments is 31 October 2024.

On 27 September 2024, the Accelerated Settlement Taskforce’s (AST) Technical Group published a draft recommendations report and consultation. Background The AST was established as part of the Edinburgh Reforms to examine the case for the securities settlement cycle to be shortened from its current standard of Trade Date plus 2 days, or ‘T+2’, to Trade Date plus 1 day or ‘T+1’. The AST’s initial report, published in March 2024, recommended that the UK should commit to moving to a T+1 standard settlement cycle at the latest by the end of 2027. It was recognised that a number of technical and operational changes would be necessary for the UK to be ready to move to T+1 and so the report also recommended that a new group – the Technical Group – should be set up to determine the details of these necessary technical changes. The report recommended that: This group should select a specific date before the end of 2027 for the UK to transition to T+1. Regardless of the migration date to T+1, appropriate operational changes, such as market standards for allocations and confirmations and electronic processes for exchanging SSIs, should be mandated with effect from a date in 2025 to help prepare for T+1. The UK should engage with other European jurisdictions to see if it is practical to align similar moves to T+1 as well as taking account of the impact of the move to T+1 by North American markets (USA, Canada and Mexico) in May of 2024. The Government accepted all of the recommendations in the AST’s report and established the AST Technical Group to carry out the next phase of work. The Technical Group was asked to produce a report with its findings and recommendations by the end of 2024, which it said may include actions for Government, the UK financial services regulators and industry participants. The draft recommendations report and consultation The draft recommendations include: ‘Recommendation Zero’, which is the scope of instruments that will be covered by the implementation of T+1 in two scenarios (where the UK migrates to T+1 ahead of the EU and Switzerland; and where the UK, EU and Switzerland migrate together). 43 ‘Principal recommendations’, which cover the critical post-trade activities that market participants must be able to complete efficiently if the UK’s transition to T+1 and their contribution to that is to be successful. 14 ‘Additional recommendations’, which look at environmental issues that need to be addressed if the UK is to maximise the efficiency gains that T+1 can deliver, but which are not essential to the successful implementation of T+1.# Next steps The AST Technical Group is inviting comments on the draft recommendations until 31 October 2024.

On 3 October 2024, the Broadcast Committee of Advertising Practice (BCAP) published a new rule explicitly banning advertisements for certain types of cryptoasset products from being broadcast to mainstream, non-specialist audiences. BCAP explains that these products were already subject to such a restriction under BCAP Code rule 14.5.4, as the products are not regulated by the Financial Conduct Authority (FCA). However, in October 2023 the FCA became responsible for regulating the advertising of fungible and transferable cryptoassets, a category which includes cryptocurrencies and utility (fan) tokens. These ‘qualifying cryptoassets’ were categorised as Restricted Mass Market Investments, meaning they can be marketed to the public subject to restrictions that recognise their risk level and require investors to undergo pre-vetting. By adding this category explicitly to the Code, BCAP intends to maintain the existing restriction of such products to appropriate specialised broadcast audiences, whilst at the same time adding more precision to the rule to acknowledge this broad and widespread category of investments that did not exist at the time the rule was created, and reminding broadcasters of the statutory restrictions that apply to advertising for them. BCAP notes that cryptoassets that are not included under the ‘qualifying cryptoassets’ category will continue to be caught under rule 14.5.4, which covers unregulated investments more generally. BCAP ran a public consultation on the proposed new rule, which is intended to add clarity for industry and consumers without altering existing policy on the advertising of these products. It did not receive any responses, so the change has now been approved by Ofcom and will take immediate effect.

On 3 October 2024, the European Securities and Markets Authority (ESMA) published a consultation paper on the review of regulatory technical standard 22 (RTS 22) on transaction data reporting under Article 26 and RTS 24 on order book data to be maintained under Article 25 of the revised text of the Markets in Financial Instruments Regulation (MiFIR). The revised text of MiFIR entered into force on 28 March 2024 and amended, among other things, Articles 25 (book record keeping) and 26 (transaction data reporting). ESMA was mandated by the European Commission to revise the existing technical standards under these Articles, RTS 22 and RTS 24. The consultation paper has two different parts covering (i) proposed amendments to RTS 22 in relation to transaction reporting and (ii) proposed changes to RTS 24 in relation to order book data. RTS 22 The part of the consultation paper dealing with RTS 22 sets out ESMA’s proposals to address its mandate under Article 26, particularly in relation to: Rules for determination of the relevant competent authority of the most relevant market in terms of liquidity. New fields to report transaction effective date and the entity subject to the reporting obligation. Proposed new identifiers and changes to existing ones to link specific transactions and identify aggregated orders. Amendments to define the relevant categories of indices. Identification of the ‘date by which the transactions are to be reported’. Amendments to the fields to align the transaction reporting requirements with the European Market Infrastructure Regulation and Securities Financing Transaction Regulation reporting frameworks and international standards. ESMA also proposes further enhancements concerning: Identification of transactions in distributed ledger technology financial instruments that fall under the scope of Article 26. Extension of the scope of cases considered as transmission of an order agreement under Article 4 RTS 22 and extension to specific cases of portfolio and fund managers under Article 7. Amendments linked to changes introduced according to the revised Article 27. Changes to the fields to improve the quality and effectiveness of the reporting. RTS 24 The part of the consultation paper covering RTS 24 sets out proposed amendments that are based on the mandate given to ESMA, in particular relating to machine readable format empowerment. Annexes The Annexes in section 9 of the consultation paper set out a consolidated overview of the proposed changes and considerations made across both parts of the consultation paper. Next steps The deadline for comments on the consultation paper is 3 January 2025. ESMA expects to publish a final report and submit revised draft technical standards to the European Commission for endorsement in Q1 2025.

On 3 October 2024, the European Banking Authority (EBA) issued a report on credit insurance. Mandate The EBA has prepared the report per the mandate given to it under the Capital Requirements Regulation 3 (CRR3), which requires the European Supervisory Authority to report to the European Commission on the eligibility and use of credit insurance policy as credit risk mitigation (CRM). Therefore, in the report the EBA reviews the prudential banking framework on CRM in relation to those changes affecting credit insurance that are brought in by the final Basel III framework. Contents The report describes the relevant features of the regulatory framework in relation to the recognition of unfunded credit protection (UFCP) and the key changes brought about by the CRR3 that impacts the treatment of credit insurance. It also discusses the risk weight floor imposed on the recognition of UFCP and the analysis, set out in sections 1.4 and 1.5, are new compared to what was presented in previous EBA opinions and frames the next step of the argumentation by defining the target risk parameters. The report then addresses the quantification of the loss given default (LGD) risk parameter for direct exposures to credit insurance and discusses the appropriateness of the removal of the possibility to model the LGD risk parameters for direct exposure toward the protection provider, i.e. the credit insurer, and of the regulatory calibration of the regulatory LGD risk parameter under the so-called Foundation IRB approach.

On 3 October 2024, the Bank of England announced that together with UK Finance, the financial sector and other UK financial authorities it had completed its latest UK market wide simulation exercise, SIMEX 24. The simulation tested the UK financial sector’s ability to respond to a major infrastructure failure that would require a total shut down and restart of the sector. The simulation was the latest exercise in a programme that explores the financial sector’s response to some of the most challenging scenarios, including those on the Government’s National Risk Register.

On 3 October 2024, the Bank of England (BoE) published its response to its earlier discussion paper on exploring longer operating hours for RTGS and CHAPS. The response summarises the feedback it received on the discussion paper and updates on the BoE’s current analysis and vision for the path ahead. Path ahead The key message in the response is that the BoE confirms that it is minded to extend RTGS and CHAPS settlement hours. It intends to adopt a phased implementation approach, starting with opening earlier at 1:30am, no earlier than 2027, and aims to achieve near 24×7 around the turn of the decade. In 2025 the BoE will issue a consultation paper setting out a full proposal including details of the end-state, implementation path and individual stages alongside the assumed operating and service model. In late 2025/early 2026 the BoE will publish a final decision on future RTGS and CHAPS settlement hours and set out a plan for the path forward to get there.

On 3 October 2024, the Bank of England (BoE) published a speech on “Enhancing our national asset: Maximising the value of data collections across the financial sector “, which was delivered by its Executive Director for Data and Analytics Transformation and Chief Data Officer, James Benford. In the speech, Mr Benford explains that the BoE is working to transform how it collects, uses and shares its data, to maximise its value. He says that transforming statistical productions and working with the Financial Conduct Authority, international regulators and industry to transform data collections is key to this. This work facilitates the international competitiveness of the UK economy and its medium- to long-term growth, as well as enhancing the data supporting supervision. Mr Benford highlights two key points: Data that is more timely and more attuned to user needs will better support monetary and financial stability and contribute more broadly to economic growth. Enhancements to the way data is collected can improve agility and productivity by freeing up and taking cost out of the data supply chain and strengthen data standards across the financial sector as a whole. Firms are encouraged to collaborate with the BoE, engaging with it and flagging where they see opportunities to add value. Mr Benford notes that data collection and dissemination involves many sets of hands and machines, and it is only by working together that the BoE and industry can “build a national asset that serves everyone as efficiently and effectively as possible”.

On 3 October 2024, HM Treasury (HMT) published a final draft of the Payment Services (Amendment) Regulations 2024, which are intended to allow payment service providers (PSPs) to slow down the processing of outbound payments when there are reasonable grounds to suspect fraud or dishonesty. The draft Regulations are intended to support efforts to tackle authorised push payment (APP) fraud, where victims are unknowingly tricked into sending significant sums to fraudsters. Under the draft Regulations, banks will be given new powers to delay and investigate payments that are suspected of being fraudulent, with the aim of helping to protect consumers against scammers. The maximum time that payments can be delayed will be extended by 72 hours where there are reasonable grounds to suspect a payment is fraudulent and more time is needed for the bank to investigate. This is intended to give banks more time to “break the spell woven by fraudsters over their victims” and tackle the estimated £460 million lost to fraud in 2023 alone. Banks that have reasonable grounds to suspect a payment is fraudulent will need to inform customers when a payment is being delayed. They will also need to explain what the customer needs to do in order to unblock the payment. This need for evidence to trigger a delay aims to help protect people and businesses from unnecessary payment delays. Banks will also be required to compensate customers for any interest or late payment fees they incur as a result of delays. Next steps HMT plans to lay the legislation before Parliament shortly after its return from conference recess.

On 3 October 2024, the Payment Systems Regulator (PSR) published a policy statement, PS24/7, confirming the maximum level of reimbursement under its Faster Payments Authorised Push Payment (APP) scams reimbursement requirement. Background The PSR announced on 26 September 2024 that it had decided to start the maximum level that PSPs will have to reimburse victims of Faster Payments APP scams at £85,000 per claim. The maximum reimbursement value had previously been set at £415,000. The reimbursement requirement aims to incentivise all payment firms to prevent these scams from happening in the first place, and make sure consumers are protected if they do fall victim. The policy statement In PS24/7, the PSR explains that setting the maximum level of reimbursement at £85,000 will mean that 99.8% of all Faster Payments APP scams by volume, and 90% by value, are fully reimbursed, providing they fall in scope of the policy. It notes that it will also mitigate possible prudential risks to PSPs, which will protect customers from any potential long-term adverse impacts. The PSR considers this to strike an appropriate balance, having regard to all of its statutory objectives. This level will be kept under review and considered as part of the PSR’s 12-month evaluation of the reimbursement policy. Next steps The start date for the reimbursement policy is 7 October 2024, and the PSR reminds payment service providers (PSPs) that it is crucial that they continue the work already underway to prepare and ensure they are ready to implement the requirements. The PSR also intends to continue to work with stakeholders after the policy has gone live to support ongoing effective consumer reimbursement in line with the policy.

In a move to facilitate the international standardization and harmonization of data elements in line with the Group of 20’s over-the-counter (OTC) derivatives market reform, the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) (together, the Regulators) jointly published, following a two-month consultation from March to May 2024, a conclusions paper (Conclusions Paper) on enhancements to the OTC derivatives reporting regime to mandate, including: the use of a Unique Transaction Identifier (UTI), which is a unique and paired code for identifying a derivatives transaction, and helps to identify and resolve potential reporting errors[1]; the use of a Unique Product Identifier (UPI), which is a unique identifier denoting a specific OTC derivatives product[2]; and the reporting of Critical Data Elements (CDE), which are standard sets of OTC derivatives transaction data elements (other than UTIs and UPIs), formats and allowable values[3]. Background to the Consultation The Regulators previously issued a joint consultation in April 2019, narrower in focus, inviting responses on proposals to mandate the use of UTIs and reporting to the Hong Kong Trade Repository (HKTR), which was met with mixed and divergent views. This prompted discussions on how UTI should be implemented in Hong Kong and elsewhere. Nevertheless, at the time there was insufficient consensus internationally and among market participants, and the proposals were not implemented. As international discussions progressed in the last few years, the Regulators noted that other major jurisdictions had launched and concluded related consultations and implemented UTI, UPI and CDE requirements. The Regulators jointly launched the 2024 consultation in March (Consultation Paper) to further develop the reporting framework in Hong Kong. We had previously discussed this in our Global Regulation Tomorrow Plus podcast, available here and on Spotify / Apple. Key Takeaways from the Conclusion Paper The Regulators noted in the Conclusions Paper that respondents to the 2024 consultation were supportive of, and recognized the benefits brought by, international standardization of approaches to the OTC derivatives reporting regimes globally. The key takeaways include: The Regulators have confirmed that the proposed UTI implementation date of 29 September 2025 will not change. The Regulators have noted that jurisdictions such as Australia, Japan, the EU, the UK and Singapore are implementing mandatory reporting of UTI in 2024 and expect that the industry will have sufficient experience of, and will have developed appropriate procedures to comply with, comparable requirements by the time of Hong Kong’s proposed implementation date. This may help alleviate many of the operational challenges encountered by reporting entities earlier this year. To assist reporting entities with coordinating their global UTI implementation, the HKTR reporting templates have been updated to incorporate UTI-related data fields to provide flexibility for optional early implementation. Reporting entities are encouraged to start reporting UTI as soon as possible. As UPIs are considered a “new set-up” by the designated UPI provider (the Derivatives Service Bureau), the Regulators have concluded that 29 September 2025 is an appropriate time to implement mandatory UPI reporting. This is because the UPI service will have been in place for almost two years by this date, with market participants already reporting relevant UPIs for major jurisdictions, including to the Australian Securities and Investments Commission, the US Commodity Futures Trading Commission, the Japanese Financial Services Agency, the Monetary Authority of Singapore and under UK EMIR and EU EMIR. It is expected that familiarity and knowhow amongst market participants should, by September 2025, be in place. The Regulators have re-assessed the need for certain CDE data fields, deciding not to mandate a number of such fields which provide information that can be derived from others, or may serve a similar purpose. Certain data fields will also be made optional to the extent that doing so will not compromise the efficient monitoring of markets. These changes will bring down the number of mandated data fields into a range that is comparable with the EU, the US, and other APAC jurisdictions. Reporting entities will need to report all new transactions and their lifecycle events based on data fields starting from 29 September 2025. The Regulators have also noted that several correspondents raised the issue of not being able to identify asset classes for digital assets and crypto derivatives. While the Regulators have noted that the utilization of the Digital Token Identifier (DTI) is a remedy for this issue (for example, ESMA has spearheaded the move to require the use of DTI for standardized identification of crypto-assets since October 2023) and will accommodate the use of DTI in Hong Kong reporting requirements, the Regulators will continue to observe developments in other jurisdictions so as to align Hong Kong’s reporting requirements with international practices. These developments show that the Regulators are taking proactive steps towards aligning with reporting standards across other major jurisdictions. We expect the implementation of the UTI, UPI and CDE regimes to further bolster Hong Kong’s status as an international finance hub. [1] For further details, see the Technical Guidance on Harmonisation of the Unique Transaction Identifier issued by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) in February 2017. [2] For further details, see the Technical Guidance on Harmonisation of the Unique Product Identifier issued by the CPMI and IOSCO in September 2017. [3] For further details, see the Technical Guidance on Harminsation of critical OTC derivatives data elements (other than UTI and UPI) issued by the CPMI and IOSCO in April 2018 and the Harmonisation of critical OTC derivatives data elements (other than UTI and UPI) Revised CDE Technical Guidance version 2 and version 3 issued by the Regulatory Oversight Committee of the Global Legal Entity Identifier Foundation in September 2021 and September 2023 respectively.

On 1 October 2024, the United Nations Environment Programme Finance Initiative (UNEP FI) published the Net-Zero Banking Alliance (NZBA) 2024 Progress Report, which concludes that most NZBA banks are taking significant steps towards meeting their climate goals. Banks voluntarily commit, when joining NZBA, to: Independently setting their first targets for reducing emissions associated with their financing activities in carbon-intensive sectors of the economy within 18 months of becoming members. Developing transition plans within 12 months of setting targets that detail how they will achieve them. Publishing a full set of sectoral targets covering all or a substantial majority of the carbon-intensive sectors where they have material exposure within 36 months.  The report shows that, as of the end of May 2024, 97% of the 122 banks due to have set their first sectoral targets had done so; nearly two-thirds of the 91 banks due to publish transition plans had done so, with 25% more expected by year-end; and around four-fifths of the 50 banks due to publish a full set of targets had done so. UNEP FI notes that there are “visible signs of a transformative shift” that has taken place over the past three years as banks position themselves to understand and finance the transition to net zero. The report also highlights areas in need of additional attention and support, including setting decarbonisation targets for banks which remains a challenging exercise due to the quality of client greenhouse gas emissions data, unclear decarbonisation pathways, and a lack of a supportive policy environment. These challenges are particularly acute in emerging markets. Insights drawn from the latest progress report are intended to inform the support that NZBA will provide to members as they develop their individual and independent targets over the coming year, in particular its work with emerging market banks that are progressing towards meeting their commitments but need more time to meet milestones.

On 30 September 2024, the European Securities and Markets Authority (ESMA) published its Annual Work Programme for 2025, which it says reaffirms its strategic orientation and commitment to safeguarding resilient, transparent and sustainable European financial markets. ESMA explains that it will focus on key strategic priorities and the implementation of new mandates, with key areas highlighted including: The EU transition towards a greener and more sustainable economy. Addressing the impact of digitalisation and technology in the area of financial markets. Making EU capital markets more effective and efficient, including through progressing the reviews of the European Market Infrastructure Regulation, the Markets in Financial Instruments Regulation and Directive, the Undertakings for Collective Investments in Transferable Securities Directive, the Alternative Investment Fund Managers Directive, and the European Long-Term Investment Funds Regulations. Delivering on major technical mandates under the Regulation on Markets in Crypto-Assets, the European Single Access Point, the Listing Act, and the EU Green Bonds and ESG Ratings Regulations. The selection and authorisation of the first consolidated tape provider, which ESMA flags as an important step to enhance transparency of European markets. The Retail Investment Strategy.

On 30 September 2024, the Financial Conduct Authority (FCA) published an update to its statement on forbearance in relation to investment trust disclosure requirements. The statement, originally published on 19 September 2024, sets out the FCA’s forbearance given the Government’s intention to exclude some investment trusts from the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation and other assimilated law. In its update, the FCA flags that: The implication of the forbearance is that it applies along the distribution chain to any firm carrying on business relating to these products, including manufacturing, distribution or marketing. All firms must continue to comply with other relevant rules and regulations including the Consumer Duty and the requirements to ensure communications are fair, clear and not misleading. Firms must also comply with the requirements in COBS 2.1.1R to act honestly, fairly and professionally in accordance with the best interests of clients. In light of this, firms across the distribution chain will need to consider what approach will deliver good outcomes for their retail clients. The FCA suggests that, where firms choose not to provide a key information document, they may wish to consider whether any additional product information is needed to support retail investors, in line with PRIN 2.A.5.3R(1) requirements to equip consumers with the information to make effective, timely and properly informed decisions. Product governance requirements generally require product manufacturers and distributors to share relevant information about the product to ensure it is appropriately distributed, and distributor firms (or any firm preparing communications for retail customers) are also subject to Consumer Duty obligations relating to meeting the information needs of retail customers. In light of the forbearance statement, the FCA expects firms in the distribution chain for securities issued by investment trusts to look to work together to determine and share what information is required to enable the continued distribution of these products, in compliance with their more general obligations towards retail investors, including in particular under the Consumer Duty.

On 1 October 2024, the Bank of England (BoE), the Financial Conduct Authority (FCA) and the Working Group on Sterling Risk-Free Reference Rates (Working Group) issued a statement highlighting that the remaining synthetic LIBOR settings were published for the last time on 30 September 2024 and LIBOR came to an end. All 35 LIBOR settings have now permanently ceased. The statement notes that the transition away from LIBOR, which was once referenced in an estimated $400 trillion of financial contracts, has made financial markets “safer, more stable and fit for modern use”. It explains that UK regulators, their international counterparts and market participants have worked together over the past decade to move to risk-free rates (RFRs), based on robust data. Synthetic LIBOR acted as a temporary bridge to give firms more time to move outstanding legacy LIBOR-linked contracts towards alternative RFRs, to allow for an orderly cessation. The BoE, the FCA and the Working Group also flag that, having phased out LIBOR, the Working Group has met its objective and will be wound down with effect from 1 October 2024. Looking ahead, market participants are reminded that: They should continue to ensure they use the most robust rates for the relevant currency, such as SONIA for GBP and SOFR for USD. They should ensure their use of term RFRs, such as term SONIA and term SOFR, are limited and remain consistent with the relevant guidance on best practice on the scope of use. Credit sensitive rates (CSRs) should not emerge as successor rates – this is supported by the Financial Policy Committee’s (FPC) view that these rates are not robust or suitable for widespread use as a benchmark. In particular, the FCA and the FPC have communicated to the market that USD CSRs have the potential to reintroduce many of the financial stability risks associated with LIBOR.   

On 30 September 2024, the European Banking Authority (EBA) published its work programme for 2025. The work programme discusses the EBA’s priorities, with a brief overview of the priorities for 2025-2027 followed by a more detailed presentation of priorities for 2025. It then sets out its work under 19 activities, grouped in three categories: (i) policy and convergence work, (ii) risk assessment and data and (iii) governance, coordination and support. The work programme also contains three annexes covering an organisational chart, the resource allocation per activity for 2025, and the peer review work plan for 2025-2026. Among other things in 2025 the EBA will address a large number of mandates including the implementation of the EU banking package. The EBA will also assume new roles and responsibilities in 2025 particularly in relation to the Digital Operational Resilience Act and the Regulation on markets in crypto-assets. 2025 will also mark the transition to a new EU anti-money laundering framework and authority.

On 30 September 2024, the Joint Money Laundering Steering Group (JMLSG) published revisions to Sector 18 (Wholesale markets) in Part II of its Guidance. The revisions, which the JMLSG consulted on earlier in 2024, have been submitted to HM Treasury for Ministerial approval.