AUGUST 2021
AMEIS REGFACTS FINTECH - Related Regulatory & Compliance News
In This Issue : Much Anticipated Canadian-Made Open Banking is Almost Here .....1 IIROC, IFIC, PMAC and IIAC Welcome CSA’s Upcoming Single SRO ..4 EC’s Long-awaited Q&A Provides Some Clarity on SFDR ...................6 IOSCO Consults on ESG Ratings and Data Providers ..........................8 HM Treasury Launches Post-Brexit AML/CTF Review ......................12 Delegated Acts Integrating Sustainability into AIFMD, UCITS and MiFID Out in the OJEU .........................................................................13 CISA’s Catalog of Cybersecurity Bad Practices in the Making .........15 BIS on the Regulation of Digital Payment Services and E-Money ....15 ISDA, ICMA & ISLA Joined Forces for Common Domain Model .......17 SPACs: What are they? ........................................................................18
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Much Anticipated Canadian-Made Open Banking is Almost Here On August 4, the Advisory Committee (The Committee) on Open Banking released their Final Report (‘The Report’) with the recommendation for a new regulatory framework enabling data portability with third-party services providers to be implemented by 2023.
To enable an open banking system in Canada that is secure, efficient and consumer-friendly, the Committee’s proposal is focused around 6 core consumer outcomes: Consumer data is protected Consumers are in control of their data Consumers receive access to a wider range of useful, competitive and consumer friendly financial services Consumers have reliable, consistent access to services Consumers have recourse when issues arise Consumers benefit from consistent consumer protection and market conduct standards.
As outlined in the Report, open banking allows an individual to control, edit, manage, and delete his information and decide when, how, and to what extent this information is communicated to others. Furthermore, the Key Report indicates that takeaways financial inclusion should be taken into account in the open banking framework to address issues related to groups that are financially marginalized. The Committee is also advocating for a hybrid model where open banking will be based on ‘both industry and government-led models deployed elsewhere’ but taking into account the Canadian specificity. The Committee recommends that the following be included in the initial scope of the Canadian Open Banking System: Participants: All federally regulated banks, provincially regulated financial institutions (on a voluntary basis) and other entities subject to accreditation criteria User Accounts: Small and medium enterprises (SMEs) 1
Account Data: Chequing and savings accounts, investment accounts accessible to the consumer, lending products (e.g., credit cards, lines of credit and mortgages) Derived Data: With the possibility for participants to exclude derived data from open banking as they are considered ‘proprietary’ (as the institution has invested the resources in processing the data). Although, when this data is readily available to the consumer and may be accessed via screen scraping, participants should have an obligation to justify its exclusion. “Read” vs. “Write” Functionality: ‘Read access’ will allow third party service providers to receive consumer financial data, but not edit this data on banks servers. ‘Write access’ is excluded from the initial scope of open banking. Reciprocal Data Access: Requiring all accredited participants within an open banking system to be equally subject to consumer-permissioned data mobility requests. The Final Report also includes the Committee recommendations on governance with a primary requirement that governance ‘be impartial, transparent, and representative of all parties in an open banking system’. The Committee recommends the appointment of a Lead by the Government responsible for convening stakeholders to advance the key foundational elements (i.e., Common rules, accreditation framework and technical specifications) and implementation of a system of open banking in an 18 months period. The common rules will focus on subjects such as: Liability: Who is responsible for what and how to provide compensation when something goes wrong. The Report recommends that participants (1) have an internal consumer complaints handling process, (2) be a member of an alternative dispute resolution mechanism or external complaints body, (3) have protocols in place to trace data so that all API calls are recorded and can be audited and (4) limit liability to consumers in all functions of open banking beyond a small fixed dollar amount (e.g., $50). The report refers to EU PSD2, Australia's Consumer Data Right and the Canadian Financial Consumer Protection Framework as good examples.
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Privacy: Consumers express consent and consumers have control over their data as provided in the upcoming Consumer Privacy Protection Act (data mobility, deletion etc.…). Privacy framework that should be facilitated by information that is clear, simple and not provided in a misleading language. Security: The Committee encouraged minimum cybersecurity practices that will serve as a baseline and be applicable to all participants. The data security & operational and systemic risk framework should be based on a tiered accreditation system designed through a collaborative work between the government, industry and system participants, and cybersecurity experts. To reinforce the common rules, the Committee recommends the introduction of an accreditation framework analogous to the Systems and Organization Controls (SOC) process and that should be guided by the following principles: Trusted: Enabling third party service providers to demonstrate their credibility as Key takeaways participants in an open banking system. Independence: Independent accreditor with auditing capacity or a government regulatory body. Proportional to Risk: The accreditation process should reflect the degree of risk that a third-party service provider poses to the system. Transparency: Information about accreditation should be publicly available and accessible to consumers and other market participants. Accreditation criteria, process and result should be clearly explained to candidates. A central registry of all accredited parties should be made available to consumers. Coherent: The accreditation regime should take into account the diversity of regulatory regimes to avoid duplicative or conflicting expectations. Concerning the technical specifications and standards, the Committee recognized the work that is currently being done by technical experts and recommends that they be guided by the following principles: Accessible and inclusive for all accredited system participants without requiring additional arrangements Enable a positive consumer experience without overly onerous steps that the consumer must follow to realize the benefits of open banking Enable the safe and efficient transfer of data among system participants 3
Capable of evolving with technological change to keep pace with the rapidly evolving sector Sufficiently flexible to enable the development of new and innovative products Compatible and interoperable with international approaches. To note that the term 'consumer-directed finance' that was proposed to be used in lieu and place of 'open banking’ will finally not be retained as the term 'open banking' is better understood in industry and international fora. The report was welcomed by the Minister of Finance who is planning further actions.
IIROC, IFIC, PMAC and IIAC Welcome CSA’s Upcoming Single SRO CSA Position Paper 25-404 - New Self-Regulatory Organization Framework (the ‘Position Paper’), released on August 3 was previously subject to extensive review by a broad range of stakeholders (67 respondents) — see our previous article CSA Requests Feedback on SROs Framework. The Position Paper includes a proposal for a new regulatory framework that will be centered on investor protection to promote public confidence and accommodate innovation and change. The CSA proposed the establishment of a new single enhanced Self Regulatory Organization (New SRO) and the consolidation of the two current investor protection funds (IPFs) into an independent single protection fund. The New SRO framework will achieve the objective of the CSA to address 7 identified-issues namely, duplicative operating costs for dual platform dealers, product-based regulation, regulatory inefficiencies, structural inflexibility, investor confusion, public confidence in the regulatory framework and market surveillance. To address the issues, CSA’s proposed solutions to support the New SRO include: Improving Governance: Clear communication of public interest mandate. New SRO board composition. Independence criteria for independent directors. Formal investor advocacy mechanisms. CSA involvement in New SRO corporate governance. CSA oversight. 4
Strengthening Proficiency: More nuanced proficiency-based registration categories to ensure consistent quality of standards for clients. Promote the merits of additional credentials for individual registrants. Implement a streamlined Continuing Education program that is fair, consistent and proportionate Enhancing Investor Education: Establishment of a separate investor office within the New SRO. Increasing Access to Advice: Allowing introducing / carrying broker arrangements between mutual fund dealers. Enable a dual platform dealer to include its mutual fund dealer and investment dealer businesses within one legal entity. Rule or explicit guidance enabling more part-time advisors in all dealer platforms. Reducing Industry Costs: Chief Financial Officers (CFOs), Chief Compliance Officers (CCOs) to serve multiple firms simultaneously. Review of the current SRO fee models used to set fees paid by members. Enable members to develop and employ the use of technological advancements. Fostering Harmonization / Efficiencies: New SRO to solicit CSA comment and input on annual priorities and business plan. Harmonizing Directed Commissions: Formation of a CSA working group to continue working on this analysis to provide definitive conclusions. Maintaining Strong Market Surveillance: Establishment of a new CSA working group CSA Market Information Coordinating Working Group. Leveraging Ongoing Related Projects: Complaint resolution ongoing work with Ombudsman for Banking Services and Investments (OBSI). CSA SEDAR+ project. SRO enforcement practices. Registration.
The initial scope will include investment dealer, mutual fund dealer registration categories as well as marketplace members. The CSA is proposing a phased-in approach for the establishment and operationalization of the New SRO. Phase 1 focusing on the design of the New SRO and the New IPF, the integration of the existing SROs and IPFs under the new framework and the adoption of the issuespecific solutions. Phase 2 will focus on a potential scope extension and potential changes to the New IPF. Comments are to be submitted on or before October 4, 2021.
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The Position Paper was highly welcomed by the Investment Industry Regulatory Organization of Canada (IIROC), the Investment Funds Institute of Canada (IFIC), the Portfolio Management Association of Canada (PMAC) and the Investment Industry Association of Canada (IIAC) who are all looking forward to collaborate closely with the CSA to achieve the goal of making the self-regulatory framework more efficient and effective.
EC’s Long-awaited Q&A Provides Some Clarity on SFDR The Questions and Answers (‘Q&A’), published by ESMA on July 26, were annexed to a Decision issued by the European Commission (EC) on July 6 and aimed at providing guidance on the application of Regulation (EU) 2019/2088 (sustainability related disclosures in the financial services sector) in a number of areas following questions raised by the European Supervisory Authorities (ESAs) (i.e. ESMA, EBA and EIOPA) in January of this year. Key takeaways Key takeaways for financial market participants (FMPs) The Sustainable Finance Disclosure Regulation (SFDR) applies to non-EU AIFMs that market their funds in the EU by means of a National Private Placement Regime. SFDR applies to registered or sub-threshold AIFMs with the requirement for the latter to comply, ‘by analogy’ with the requirements to include certain information in pre-contractual and periodic documentation made available to end investors under national law, although registered AIFMs are normally not subject to such obligations under AIFMD and SFDR. PAI and the 500-employee threshold requirement - The ‘comply or explain mechanism’ which distinguishes between ‘principal adverse impacts’ (PAI) and ‘adverse impacts’ is to be understood as follows: where FMPs decide not to apply the ‘comply mechanism’ by considering the ‘principal adverse impact’ they must ‘explain’ clearly the reasons why they do not consider ‘adverse impacts’ of investment decisions on sustainability factors. - 500 employee criteria and groups: For FMPs to determine whether they can opt out of the ‘principal adverse regime’, the calculation of the headcount must include the number of employees of a parent undertaking and of subsidiary undertakings that are established in or outside the Union. The disclosure obligations will apply only at the entity level and not the group level.
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Financial products subject to Article 9: These products can only invest in underlying assets qualified as ‘sustainable investments’ and also include investments for ‘certain specific purposes such as hedging or liquidity’. The Commission noted that Article 9 (and 8) is neutral in terms of product design, investment tools, strategies or methodologies, nevertheless, the product documentation must include information on how these elements complies with its ‘sustainable investment’ objective. Financial products subject to Article 8: These products promote environmental or social characteristics. Clarification by the Commission includes: - A product name is sufficient to trigger the application of Article 8. - Article 8 products are subject to disclosure requirements. - The products may pursue reduction of negative externalities caused by the underlying investments, such as principal adverse impacts on sustainability factors. - They can partially be invested in ‘sustainable investments'. takeaways - Integration of sustainability risks (cf. Article 2 (22) ofKey SFDR) is not sufficient for Article 8 to apply. - Are subject to Article 8 those products that comply with certain international environmental, social or sustainability requirements or restrictions provided that these characteristics are promoted in the product investment policy. - A broad explanation of the term ‘promotion’ that leaves room for interpretation and includes direct or indirect claims information, reporting, disclosures and other impressions that investments pursued by a given product also consider environmental or social characteristics. Impressions may include such documents as: (i) pre-contractual, and (ii) periodic documents, (iii) marketing communications, (iv) advertisements, (v) product categorization, (vi) description of investment strategies or asset allocation, (vii) information on the adherence to sustainability-related financial product standards and labels, (viii) use of product names or designations, (ix) memoranda or issuing documents, (x) factsheets, (xi) specifications about conditions for automatic enrolment or compliance with sectoral exclusions or statutory requirements. All this applies regardless of the form used (paper, durable media, websites, or electronic data rooms).
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SDFR came into force on March 10, 2021 and required asset managers operating in the EU to categorise their products as: ‘Non-green’ or’ Grey’ (Article 6): Products that either consider ESG risks as part of the investment process, or are explicitly labelled as non-sustainable. ‘Light green’ (Article 8): Products promoting environmental or social characteristics, but not sustainability. ‘Dark green’ (Article 9): Products with a sustainable investment strategy. The categorization purpose is to help entities determine the level of disclosure related to the various sustainability risks associated with their investments and products that they will be subject to. Although, the Commission attempts for clarification fails as it did not provide enough comfort on how to efficiently and accurately this product Keyachieve takeaways categorization. The Commission's answers will be of particular interest to asset managers established outside of the European Economic Area (EEA), firms subject to Article 8 vs. Article 9 product categorizations. To note that the delegated acts prepared under the SFDR will now not apply until 1 July 2022.
IOSCO Consults on ESG Ratings and Data Providers On July 26, the International Organization of Securities Commissions (IOSCO) released a Consultation Report containing a set of proposed recommendations regarding Environmental, Social and Governance (ESG) Ratings and Data Product Providers. The Consultation Report includes ESG rating and data products providers practical steps that may help improve the usability and reliability of the information companies currently disclose.
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The proposed practical steps, listed hereunder, follow IOSCO request for feedback during a fact-finding exercise: Use of one existing report as a primary form for ESG disclosure by companies (e.g., annual sustainability report). Companies should ensure consistency with regard to the KPIs provided in these reports (e.g., clarity on where figures are being restated from a previous year, regarding the scope of the figures that are being presented, provision of time series information). More transparency about the timing of disclosures and dialogues with ESG rating and data products providers (to help ESG rating and data products providers align their review frequencies with the availability of information). More dialogue between companies and ESG ratings and data products providers to understand when ESG ratings and data products will be subject to review/update to ensure both are aware of when engagement may be beneficial to address information gaps, or errors/omissions Key in ESG rating and data takeaways products. Based on the fact-finding exercise, IOSCO is proposing some improvements from the users’ perspective by setting out proposed high-level recommendations and possible action points for meeting the objectives of the proposed recommendations that are described below. Proposed recommendations on possible regulatory and supervisory approaches IOSCO recommends that Regulators be more focused on the use of ESG ratings and data products and ESG ratings and data products providers in their jurisdictions. To meet this proposed recommendation, IOSCO is suggesting, among others, that regulators consider the following: Existence of potential conflict of interest Public disclosure of the information the provider relies on Public disclosure of the provider’s methodologies Whether the provider’s ESG ratings and data products issued are consistent with the relevant methodologies Whether the processes underlying ESG ratings and data products are subject to written policies and procedures and/or internal controls that are rigorous, systematic, and applied in a continuous manner.
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Proposed recommendations on the internal processes of ESG ratings and data products providers Through the issuance of high quality ESG ratings and data products based on publicly disclosed data sources where possible and other information sources where necessary, using transparent and defined methodologies. To meet this proposed recommendation, providers of ESG ratings and data products should: Adopt and implement written procedures designed to ensure that the ESG ratings and data products they issue are based on a fair and thorough analysis of all relevant information available to them. Adopt, implement and provide transparency around methodologies for their ESG ratings and data products that are rigorous, systematic, applied continuously. Key takeaways Ensure that these methodologies are subject to regular review, with sufficient communication regarding changes made to the methodologies. Provide transparency around the sources of data used in determining their ESG ratings and data products, including the use of any industry averages, estimations or other methodologies when actual data is not available. This may include transparency around whether the data used is up to date, publicly sourced or proprietary in nature, including through approximations. IOSCO is also recommending that ESG ratings and data products providers ensure that their decisions are, to the best of their knowledge, independent and free from political or economic pressures and from conflicts of interest arising due to the ESG ratings and data products providers’ organizational structure, business or financial activities, or the financial interests of the ESG ratings and ESG data products providers’ employees. Another recommendation is for ESG ratings and data products providers to make their best-efforts basis, avoid activities, procedures or relationships that may compromise or appear to compromise their independence and objectivity when running their operations.
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Proposed recommendations concerning the use of ESG ratings and data products The Report indicated that financial market participants could consider conducting due diligence on the ESG ratings and data products that they use in their internal processes. This due diligence could include an understanding of what is being rated or assessed by the product, how it is being rated or assessed and, limitations and the purposes for which the product is being used. This evaluation could cover, among others: The sources of information used in the product, the timeliness of this information, whether any gaps in information are filled using estimates, and if so, the methods used for arriving at these estimates. An evaluation of the criteria utilized in the ESG assessment process, the relative weighting of these criteria in the process, the extentKey of qualitative judgement takeaways and whether the covered entity was involved in the assessment process. Proposed recommendations concerning the interactions of ESG ratings and data products providers with entities subject to assessment by ESG ratings and data products providers ESG ratings and data products providers may improve their information gathering processes with entities covered by their products in a manner that is efficient and leads to more effective outcomes for both the providers and these entities. They could also consider responding to and addressing issues flagged by entities covered by their ESG ratings and data products. Proposed Recommendation on how covered entities could consider interacting with ESG ratings and data products providers These entities may consider to streamline their disclosure processes for sustainability by taking into account other legal requirements in their jurisdictions. Comments are to be submitted by on or before 6 September 2021.
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HM Treasury Launches Post-Brexit AML/CTF Review In anticipation of secondary legislation due in Spring 2022, the UK’s HM Treasury launched a consultation paper to gather views on potential amendments to the Money Laundering, Terrorist Financing and Transfer of Funds Regulations (MLRs). The consultation document, published on July 22nd, invites views from industry, law enforcement, supervisors and the broader public and civil society on five broad topics: 1) Risks, impacts and compliance costs on businesses and their services relating to potential amendments on exemptions to the scope of the regulated sector presenting low risk of money laundering and terrorist financing, including: Account Information Service Providers (AISP) Payment Initiation Service Providers (PISP) Key takeaways Bill payment service providers (BPSP) Telecoms, Digital and IT Payment Service Providers (TDITPSP) Art Market Participants (AMP) Specifically for the AMP, the HM Treasury also invited views on the scope of the definition of AMP; for example whether it should include those who trade in the sale and purchase of digital art. 2) Supervisory enhancements relating to amendments to the: Current approach to accessing and viewing the Suspicious Activity Reports (SARs) by supervisors Activities that make a relevant person a financial institution to align with Financial Services and Markets Act (FSMA) 3) Strengthened supervisory regime to include: A definition of proliferation financing aligned with FATF definition Limited partnership formation Alignment of reporting obligations on discrepancies in beneficial ownership information 12
4) Information sharing and gathering, particularly: Reciprocal protected sharing from relevant authorities, including an expanded list of recognised ‘relevant authorities’ with access to an information sharing gateway Further supervisory powers to the Financial Conduct Authority (FCA) 5) Cryptoasset sector and applicability of: Funds Transfer Regulation (FTR) General Data Protection Regulation (GDPR) The consultation remains open until October 14, 2021 and email responses should be sent to Anti-MoneyLaunderingBranch@hmtreasury.gov.uk .
Key takeaways
In addition to the consultation, HM Treasury has published a separate call for evidence on UK’s AML/CTF regulatory and supervisory regimes. The call for evidence aims to gauge the overall effectiveness of the regimes, their extent (i.e. the sectors in scope), and the application of particular elements of the Regulations.
Delegated Acts Integrating Sustainability into AIFMD, UCITS and MiFID Out in the OJEU On August 2, the following Delegated Regulations were published in the Official Journal of the European Union (OJEU): Commission Delegated Regulation 2021/1255 amends Delegated Regulation (EU) No 231/2013 as regards the sustainability risks and sustainability factors to be taken into account by Alternative Investment Fund Managers, notably with the following additions: AIFMs shall take into account sustainability risks when complying with the requirements Where AIFMs consider principal adverse impacts of investment decisions on sustainability factors, they shall take into account such principal adverse impacts when complying with the requirements AIFMs shall retain the necessary resources and expertise for the effective integration of sustainability risks 13
AIFMs shall include conflicts of interest that may arise as a result of the integration of sustainability risks in their processes, systems and internal controls The risk management policy shall comprise procedures necessary to enable the AIFM to assess for each AIF it manages the exposure of that AIF to market, liquidity, sustainability and counterparty risks, and the exposure of the AIF to all other relevant risks, including operational risks, which may be material for each AIF it manages Commission delegated regulation (EU) 2021/1253 of 21 April 2021 amending Delegated Regulation (EU) 2017/565 as regards the integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for investment firms. Commission delegated regulation (EU) 2021/1254 of 21 2021 correcting KeyApril takeaways Delegated Regulation (EU) 2017/565 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive. Commission delegated regulation (EU) 2021/1270 of 21 April 2021 amending Directive 2010/43/EU as regards the sustainability risks and sustainability factors to be taken into account for Undertakings for Collective Investment in Transferable Securities (UCITS). The Delegated Regulations were initially adopted by the European Commission in April 2021, see and refer to our article EU/EC Adopts Sustainable Finance Package (ameiscorp.com). All the Delegated Regulations and Directive will enter into force on 22 August 2021 and will apply from 2 August 2022.
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Industry News CISA’s Catalog of Cybersecurity Bad Practices in the Making The Cybersecurity and Infrastructure Security Agency (CISA) is developing a Catalog of Bad Practices in cybersecurity to help critical infrastructure providers prioritize their cybersecurity responsibilities. The catalog will focus on those bad practices that are ‘exceptionally risky, especially in organizations supporting Critical Infrastructure or National Critical Infrastructure (‘NCFs’)’ including but not limited to the: Use of unsupported (or end-of-life) software in service of Critical Infrastructure and NCFs. Use of known/fixed/default passwords and credentials in service of Critical Infrastructure and NCF.
Key takeaways
Both practices are considered dangerous as they significantly elevate the risk to national security, national economic security, and national public health and safety and are described as especially egregious in internet-accessible technologies. CISA will expand the list in due course and following market participants’ feedback. Concerned entities should take notice and monitor CISA's Catalog, this will help them shape and adjust, where relevant, their cybersecurity framework. BIS on Regulating Digital Payment Services and E-Money The Paper, published on July 5, is based on the input of 75 jurisdictions and gives a thorough overview on how non-bank payment service providers (NBPSPs) are regulated to help them determine their regulatory perimeter. The Paper indicates that payment systems include a wide range of NBPSPs and distinguish between retail services at the “front end” vs roles played by entities in clearing, settlement and processing at the “back end”. The Paper also finds that e-money services are currently the most intensively regulated payment services offered by NBPSPs can offer while the provision of virtual asset services is the least. Both payment services are mainly subject to AML/CTF rules. 15
Key takeaways include the following: Non-banks are able to offer “mature” or traditional payment services in most jurisdictions: With the provision of e-money accounts and processing of electronic funds for third parties being the most common payment services provided by NBPSPs. E-money issuance is subject to the most intensive regulation, and the provision of virtual asset services the least: licensing; registration; capital requirements; security deposits at central banks; ownership restrictions; mandatory partnerships with banks; safeguarding of customer funds; risk management; cyber security; AML; consumer protection; data protection; and interoperability. On average, NBPSPs in emerging markets and developing economies are more intensively regulated than those in advanced economies when it comes to acquiring payment transactions, e-wallet services and e-money issuance. Key takeaways AML/CFT requirements are the most common across payment services and jurisdictions, and interoperability the least common. Regulatory requirements for payment services provided by non-banks may be applied in a differentiated manner (authorisation – licensing/registration, safeguarding of funds and other security requirements, interoperability) or a uniform manner (AML/CFT, risk management and cyber security, data protection, consumer protection). The Paper also provides an overview of the emerging regulatory approaches regarding cryptoassets, including stablecoins which is summarized below. Regulatory responses to cryptoassets, including stablecoins, are in flux and vary widely: issuance of warnings to investors and consumers, clarification of the regulatory treatment of cryptoassets and related activities, and implementation of crypto-specific licencing, authorisation and registration regimes. Most jurisdictions do not have regulations that are specific to stablecoins. Although existing regimes do apply in whole or in part to stablecoins, which most of the time are classified as e-money.
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The regulatory treatment of a stablecoin depends on its features and how it is set up: stablecoin used as a means of payment or exchange (payment token), as an investment instrument (security token), or as a means of granting its holders access to a digital platform or service (utility token). Stablecoins are mainly subject to AML/CFT. At the international level, global standard-setting bodies are acting on stablecoins. This comprises FSB’s regulatory recommendations on “global stablecoin” arrangements (GSCs), FATF’s report on AML/CFT issues relating to stablecoins (see our summary) and IOSCO’s report on the possible implications of global stablecoin initiatives for securities markets regulators. ISDA, ICMA & ISLA Joined Force for ‘Common Domain Model’ On August 2, the International Swaps and Derivatives Association, Inc. (ISDA), the International Capital Market Association (ICMA) and the International Securities Lending Association (ISLA) signed a memorandum of understanding (MoU) with the aim to reinforce their collaboration on development of the upcoming Common Domain Model (CDM). The CDM will create a standardized digital representation of trade events and actions across the lifecycle of financial products with the goal to enhance risk management through alignment between contracts, processes and data, and the introduction of real-time regulatory oversight. ISDA points out the various efforts that are currently underway including: ICMA/CDM Steering Committee completion of the initial phase of its CDM project for repo and bonds providing a ‘single, unambiguous representation of the execution, clearing and settlement of a fixed-term repo transaction, as well as a bond transaction’. The upcoming adoption of the CDM via a digital regulatory reporting initiative for new rules required by the Commodity Futures Trading Commission (CFTC) and the European Securities and Markets Authority (ESMA). CDM development to be implemented into "ISDA Create", a platform enabling firms to negotiate and execute credit support annexes (CSA) and other collateral related documentation online.
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Product Corner SPACs: What are they? A SPAC or Special Purpose Acquisition Company is a listed vehicle without assets (i.e., shell companies) that seeks to merge with an unlisted company - allowing the latter to go public. SPACs are long-established vehicles that recently gained increased interest from investors for various transactions (e.g., transitioning a company from a private company to a publicly traded company) drawing regulatory attention to the issues they raise. Issues pre and post acquisition include conflicts of interest, disclosures, allocation, conflicted transactions, local offering restrictions, key person, periodic reporting, Key takeaways proxy, information or tender offer statement. To address these issues regulators around the globe are keeping a close watch on SPACs. In the US, the Securities and Exchange Commission (SEC), has, among others, (i) provided educational materials to investors looking to invest in these vehicles, (ii) cautioned investors against making investment decisions with respect to SPACs solely based on celebrity involvement, and (iii) provided guidance for sponsors relating to disclosure obligations. Global standard-setting bodies are also taking action; a recent example is the IOSCO New SPAC Network launched in June of this year to facilitate information sharing and keep track of the developments in this area. IOSCO SPAC Network’s first meeting was held at the end of July to discuss the regulatory concerns raised by these investment vehicles.
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Ameis Regulatory Services focuses on providing regulatory and compliance support for fintech companies
About us
Complex landscape & widening gaps
We help you understand the rules that govern your activites, services and products, enabling you to meet your ongoing regulatory obligations and navigate the ever-evolving, complex regulatory landscape.
Increasing regulatory requirements and the pace of change are making it harder for you to keep up with the pressures of compliance and managing cost-effective operations.
Our team is composed of professionals with extensive experience serving the investment management, capital markets and asset servicing industries.
Investor demand for enhanced transparency and disclosure, data privacy, investor and consumer protection requirements, and AML/KYC concerns are some of the many challenges affecting the industry.
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We provide practical and tailored solutions Review and analysis of regulatory texts Reporting Response preparation Compliance program development
Contact us Déborah Koualé, Founder deborah.kouale@ameiscorp.com
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Carolyn Le Quéré carolyn.lequere@ameiscorp.com
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