Connecting the dots: regulatory reforms in Singapore
19
Connecting the dots: Regulatory reforms in Singapore 20 April 2016
-
Upload
kate-saunders -
Category
Business
-
view
232 -
download
6
Transcript of Connecting the dots: regulatory reforms in Singapore
Connecting the dots: Regulatory reforms in Singapore
20 April 2016
2
Agenda
Enhanced Risk Management
Greater investor protection
Tackling ‘too big to fail’ problems
Regulatory reforms pipeline
Views from Europe
3
Regulatory Radar
EMIR
MiFID II
MAD
AIFMD Non-
EEA AIFM
Passports
Asset Mgt and Capital Market vulnerabilities
Asia Region
Funds
Passport
OTC
Derivatives
Crowd
funding
Outsourcing
FAIR
Framework
OTC
Derivatives
Resolution
regimeMarket
Misconduct
Regime
Market Abuse
Investigations
Basel III
Liquidity
Rules
Regulatory
Safeguards for
Investors
Short
Position
Reporting
Suitability
Requirement
Central
Depository
System
REITS
Insurance
Remuneration
Market Risk
Capital
Requirements
Code on Take-
Overs and
Mergers
Internal
Controls
Resolution
Regime
SFC Products
Handbook
Professional
Investor
Regime
FinTech
Principles of
Responsible
Ownership
AML/CFT
4
Risk is too risky?
“We need to end our risk
management project.
There is too much risk! I
am afraid we’d get it all
wrong!”
5
What is Risk Management?
Risk management is the process of
o identifying potential risks;
o assessing and monitoring them; and
o ensuring steps are taken to mitigate and control them.
Some examples:
o Lehman, Merrill Lynch, Northern Rock
Be proactive, not reactive - Don’t let your risks crystallize
6
Some Key Risks
Regulatory and
Compliance Risk
Conduct Risk
Technology Risk
Money Laundering
and Terrorist
Financing Risk
Trading Execution and Risk
Outsourcing Risk
7
Money Laundering/Terrorist Financing Risks
Credit Suisse
• $2.6bn fine and a guilty plea for assisting US persons in avoiding tax
HSBC
• $1.9bn fine for laundering of funds related to drug cartels in Mexico
BNP Paribas
• $8.9bn fine and a 5-year probation in connection with sanctions violations
Cost of non-compliance is definitely greater than the cost of compliance!
8
Other Risks
• Outsourcing is a critical component for managing business operations and controlling costs for FMCs
• MAS issued a Consultation Paper in 2014 and received industry feedback
• Key points include due diligence, SLAs, KPIs, jurisdiction, staffing/management, confidentiality and liability
Outsourcing Risks
• Code of ethics
• Skills & training
• Reputational risk
• Remuneration/incentive policies to penalise misconduct and reward good behaviour
Conduct Risks
9
Other Risks
• Cross-border regulatory overlaps
• Keeping pace with new regulations
• Lack of suitably qualified compliance talent
Regulatory risk
• Market manipulation
• Best execution
• Systems failure
Trading and Execution Risk
10
How are the risks effectively managed?
Governance & Culture
Policies & Procedures
Compliance Monitoring Program
People & Training
Internal
Audit
Segregation of
Functions
Risk
Management
11
Regulatory Radar
EMIR
MiFID II
MAD
AIFMD Non-
EEA AIFM
Passports
Asset Mgt and Capital Market vulnerabilities
Asia Region
Funds
Passport
OTC
Derivatives
Crowd
funding
Outsourcing
FAIR
Framework
OTC
Derivatives
Resolution
regimeMarket
Misconduct
Regime
Market Abuse
Investigations
Basel III
Liquidity
Rules
Regulatory
Safeguards for
Investors
Short
Position
Reporting
Suitability
Requirement
Central
Depository
System
REITS
Insurance
Remuneration
Market Risk
Capital
Requirements
Code on Take-
Overs and
Mergers
Internal
Controls
Resolution
Regime
SFC Products
Handbook
Professional
Investor
Regime
FinTech
Principles of
Responsible
Ownership
AML/CFT
12
Client’s categorisation, client’s choice
Accredited Investors
Retail
13
Opting in new clients
Notify
• Eligible Investor is being treated as retail
• Has the right to opt in to A/I regime
Explain
• Provide clear description of regulatory safeguards lost if client opts in
Confirm
• Clients confirm their understanding of the consequences of opting in
14
What about existing clients?
Does existing client meet new A/I
criteria?
Yes
Notify client of A/I status and their right
to opt out
Other disclosures
No
Can only treat as A/I with respect to
existing investments
Non-retail FIs can not offer new services /
investments to client
15
Time for change
Next Steps
Assess client base
Identify carve-outs
Prepare templates
Upgrade MAS
licence?
Review business model?
16
Regulatory Radar
EMIR
MiFID II
MAD
AIFMD Non-
EEA AIFM
Passports
Asset Mgt and Capital Market vulnerabilities
Asia Region
Funds
Passport
OTC
Derivatives
Crowd
funding
Outsourcing
FAIR
Framework
OTC
Derivatives
Resolution
regimeMarket
Misconduct
Regime
Market Abuse
Investigations
Basel III
Liquidity
Rules
Regulatory
Safeguards for
Investors
Short
Position
Reporting
Suitability
Requirement
Central
Depository
System
REITS
Insurance
Remuneration
Market Risk
Capital
Requirements
Code on Take-
Overs and
Mergers
Internal
Controls
Resolution
Regime
SFC Products
Handbook
Professional
Investor
Regime
FinTech
Principles of
Responsible
Ownership
AML/CFT
17
Regulatory Radar from outside Asia
EMIR
MiFID II
MAD
AIFMD Non-
EEA AIFM
Passports
Asset Mgt and
Capital Market
vulnerabilities
18
Globalisation of Regulation from Europe
• Expect ESMA opinion by 30th June
• Passport – pan EU-Marketing will be much easier vs
cost of complianceAIFMD
• Easier to access to European customers
• Possible to avoid member state regulationMiFID II
• Do you trade in any financial instruments admitted to
trading on EU exchanges, MTFs and OTFs?
• Already seen UK enforcement action on firms and
individuals based in the United States, Seychelles, Dubai
and Switzerland
MAD II
Conclusions and Questions
19
