Regulations Roundup – November 2019

Time flies when you’re enjoying Brexit negotiations and trade war agreements. But as bonfires are lit and Halloween gives way to Christmas, it’s essential to keep up with November’s regulatory updates. We’ve done the hard work so you don’t have to, providing a rundown of all the hot topics. You can thank us later (we like cake… and lattes). Here’s your Regulations Roundup – November 2019

Queen’s Speech Includes Financial Services Bill

Elizabeth II’s 65th Queen’s Speech delivered to Parliament touched on 26 bills including a Financial Services Bill intended to ensure that the UK maintains its ‘world-leading regulatory standards’ and remains open to international markets after Brexit. The Bill’s provisions will extend and apply to the whole of the UK. Main elements of the FS Bill include:

  • Delivering the government’s commitment for long-term market access to the UK for financial services firms in Gibraltar.
  • Simplifying the process which allows overseas investment funds to be sold in the UK. This is designed to protect the UK’s position as a centre of asset management.
  • Implementing the Basel standards to strengthen the regulation of global banks, in line with previous G20 commitments.

Ian Mason, head of UK FS regulation and joint head of UK FS sector at Gowling WLG said:

‘The proposals in the FS Bill are intended to bolster and preserve the UK’s position as a leading financial centre. In the event of a “no deal Brexit”, there would be an immediate loss of the passporting regime, which enables overseas firms to market and provide their services in the UK without needing to be re-authorised by the UK regulator, the Financial Conduct Authority, and the FS Bill is aimed in particular at helping the important asset management sector.’

‘There is also a big boost for Gibraltar’s expanding FS sector. The other proposals are intended to strengthen global capital standards in banks, which are part of the continuing response to avoid another financial crisis, similar to 2008.’

FX Leverage Cut to 20:1 in Singapore

New retail trading laws have come into effect in Singapore. Traders in the small-nation state have had their access to leverage slashed by more than half from 50:1 to 20:1. The rules enforced by the Monetary Authority of Singapore are based on the concept that high leverage poses an increased risk to retail traders and brokers are unlikely to have been taken by surprise by the leverage revisions.

There are a few loopholes to be aware of, however. For example, if you qualify as an accredited investor in Singapore, you can still access to the full 50:1 leverage ratio. To qualify, you must have:

  • Personal assets of 2 million Singaporean dollars ($1.5 million)
  • More than 1 million Singaporean dollars in cash
  • Earn more than 300,000 Singaporean dollars per year

Hong Kong Regulates Crypto Funds

Hong Kong’s Securities and Futures Commission (SFC) has set out rules for crypto asset managers for the first time. This comes during a time of intense political instability in the country and unprecedented levels of Bitcoin trading. The Commission published a 37-page “Pro forma Terms and Conditions for Licensed Corporations which Manage Portfolios that Invest in Virtual Assets.” This includes a regulatory framework for dealing with ICOs, which unlike countries such as China, have not been banned.

Joyce Yang, founder and CEO of Global Coin Research, which provides analysis of Asian crypto markets said:

“This ‘terms and conditions’ document seems to reinforce that the SFC is showing increasing understanding of the intricacies of cryptocurrency funds,” she added. “They’re being transparent with their thoughts around this space and setting guidelines that should facilitate more funding of start-ups in the region.”

SEC Reinforces Cryptocurrency Hard-Line

The US Securities and Exchange Commission has tripled down on its cryptocurrency crackdown. As perhaps the most outspoken and effective crypto-police force in the world, the SEC recently carried out three actions which confirm their hard-line approach to digital assets. These included.

#1 Filing an enforcement action against Telegram Group and Ton Issuer, Inc, for failing to register with the SEC. This halted their $1.7 billion ongoing digital token offering.

#2 Denying Bitwise Asset Management’s bid to launch a Bitcoin exchange-traded fund stating how they were not convinced the “real Bitcoin market” can be resistant to manipulation or fraud.

#3 Releasing a Joint Statement together with the heads of the Commodities Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCen), urging anyone dealing with digital currencies to ensure they are adhering to obligations under anti-money laundering and countering the financing of terrorism regulations.

Top Industry Events for November 2019

  • Decentralized 2019 – 30th October – 1st November – Athens, Greece
  • InsurTech Asia Summit 2019 – 14-15th November – Singapore
  • Fintech World Forum 2019 – 18-19 November – London, UK
  • GTR Nordics 2019 – 19 November – Stockholm, Sweden

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