As an agency specialising in financial services marketing, our team has rounded up the biggest changes that happened last month and what’s coming up in November. Here’s our Regulations Roundup, November 2024.
SEC’s New Focus On Artificial Intelligence In 2025 Examination Priorities
On October 21, the SEC outlined its examination priorities for 2025, emphasizing AI oversight. This includes scrutinising how registered investment advisers (RIAs) and broker-dealers implement and represent AI in areas like trading, compliance, and data security. The SEC is particularly interested in firms’ third-party AI tools, cybersecurity, and protection against data misuse. This initiative underscores the SEC’s commitment to aligning regulatory practices with emerging technologies and reinforcing investor protections.
CySEC Issues Notable Regulatory Updates
CySEC announced that it would no longer accept new applications for CASP registrations starting October 17, as part of its transition towards compliance with the EU’s Markets in Crypto-Assets (MiCA) regulation. CASPs must have submitted notifications by October 30, 2024, to continue operations until full MiCA compliance is mandated in December 2024. This move aligns with EU-wide efforts to standardize crypto regulations and enhance investor protection across member states.
CySEC has also implemented ESMA guidelines to prevent misleading sustainability claims in fund names, requiring funds with ESG terms in their names to meet strict sustainability benchmarks. Asset managers will now have clearer criteria on when ESG terminology is permissible in fund names, aiming to protect investors from “greenwashing” practices and ensure transparency in sustainable finance products.
These updates reflect CySEC’s ongoing alignment with EU standards to improve investor protection, ensure sustainable finance compliance, and streamline regulatory processes for crypto and investment firms in Cyprus.
FSCA laws on signals
In South Africa, the Financial Sector Conduct Authority (FSCA) clarified that signal providers will need to have a license to operate in the country. These providers fall within the purview of the Financial Advisory and Intermediary Services (FAIS) Act, whose goal is to provide consumers of the industry. FSCA made this announcement after issuing a $57,000 fine to a forex signal provider in the country. The trader was providing these signals to customers through Telegram, the highly popular communications platform.
Signals have become widespread in the financial services industry in the past few years as more people have started to trade. The challenge, however, is that enforcement of these laws will become tougher as most signals are provided by traders using Telegram and other social media platforms like Signal and Discord. Providers have also embraced using privacy-focused currencies like Tether and USDC. In a note, an analyst said:
Signals are advisory in nature as they provide clear price levels and risk management parameters for those taking the signals. Advisory services have always been regulated services.
SEC Continues Strong Stance On Crypto Companies
The Securities and Exchange Commission (SEC) has in the past sued several companies like Ripple Labs, Uniswap, Coinbase, and Kraken. It continued with this practice in October by sending a Well’s Notice to Immutable, a blockchain company that has created a layer-2 solution for the gaming and non-fungible token (NFT) industry. A Well’s Notice informs the person or company that the SEC is planning a lawsuit against them. The SEC has accused the developers of selling IMX, an unregistered security. Crypto.com, a leading crypto exchange, also sued the SEC in October after it received a Well’s Notice from the agency.
Proponents argue that the SEC is right to crack down on the crypto industry because of the lax regulations that put consumers at risk.
CFPB Rolls Out Open Banking Regulations
In the United States, the Consumer Financial Protection Bureau (CFPB) announced a new set of rules that it hopes will inject more competition in the banking industry by making it easier for customers to link their accounts to newer applications. These rules, if passed, will bring the US in line with the UK and Europe.
However, it is still too early to determine whether these rules will take effect as the banking industry has rejected them. In a statement, Greg Baer of the Bank Policy Institute said:
If left unchallenged, technology companies subject to little to no oversight will have access to very sensitive information, like how much is in your account and where you spend your money.
Meanwhile, the Federal Deposit Insurance Corporation (FDIC) has proposed new rules that will require investors to seek approval when they invest in the biggest banks in the US. These rules include passive investors like Vanguard and Blackrock. In a note, Blackrock said:
BlackRock strongly opposes the proposal, which would harm investors, disrupt the flow of capital to the economy, and undermine the efficacy.
SEC Cuts Tick Sizes For Stock Market Trades
The SEC also unveiled new policies by cutting tick sizes and the fees exchanges charge their users. These rules, which are part of Gary Gensler’s efforts to reform the stock market, will reduce the spread between buy and sell prices to half-cent from a full penny for certain stocks.
These new rules will benefit customers of these products and harm big players in the industry like banks and high-frequency trading companies that benefit from wider spreads. They will take place in November 2025.
Dutch Authority for Financial Markets MiFID II Improvements
In the Netherlands, the Dutch Authority for Financial Markets (AFM) said that it was assessing how trading firms can improve algorithm pre-trade controls to ensure that erroneous orders do not disrupt market conditions. These controls, which are part of the MiFID II regulations, require algo traders to check orders like price and volume of all orders before sending it to the market. The AFM now wants to tweak the regulations using algorithms and is working with ESMA and Oxford University to come up with models. In a statement, Robert Graumans, an official at AFM said:
We all have some kind of idea what triggers the trading behavior of humans but we don’t necessarily have a similarly good idea about what triggers the behavior of algorithmic trading firms. It’s good for regulators to admit that we still have a lot to learn.
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