RegTech Forum 2024
The London RegTech Forum, held on October 2, 2024, at the historic Livery Hall in Guildhall, brought together industry leaders, regulatory bodies, and technology experts to explore the role of RegTech in finance.
The forum featured expert panellists from leading institutions such as JP Morgan, the Bank of England, and the European Central Bank, who shared their perspectives on the challenges and opportunities shaping the future of the financial industry.
Alongside our keynote speakers, the day was structured around five panels that addressed pressing themes such as the integration of AI in regulation, the need for data standardisation, and the future of sustainable finance.
ICYMI: Key themes from the event:
1. RegTech, AI, and the Evolving Financial Landscape The opening panel kicked off with a deep dive into how regulatory frameworks, combined with advancements in artificial intelligence (AI), are transforming the financial sector. Regulation was described as a pivotal force driving industry-wide changes, and while RegTech has evolved significantly since the 2008 financial crisis, it remains an emerging field. AI’s current role in tasks like Know Your Customer (KYC) processes was discussed, with the panellists stressing the need for more sophisticated applications that balance innovation with regulatory compliance. A major theme was the importance of high-quality, transparent data, as it forms the foundation of all RegTech advancements.
2. Accelerating RegTech Adoption through Collaboration The second panel highlighted the barriers and enablers to RegTech adoption, focusing on collaboration between regulatory bodies and the financial industry. Issues like long procurement cycles and high costs were identified as key obstacles, while regulatory pushes—especially from the US—were seen as catalysts for faster adoption. Collaboration between government and industry was also highlighted as critical, with discussions on the UK Treasury’s involvement in crypto regulation serving as a prime example of how RegTech is being integrated into policy frameworks. The future of RegTech, particularly with the integration of technologies like generative AI and blockchain, was projected to bring even more innovation in regulatory processes.
3. Data Standards: Now or Never The need for data standardisation in the financial sector was a central focus in the third panel. The panellists argued that standardisation simplifies compliance and cuts operational costs while ensuring better data quality across financial institutions. However, differing reporting requirements across jurisdictions, particularly within Europe, pose significant challenges. The European Central Bank’s Integrated Reporting Framework (IReF) was praised as a promising step towards harmonisation, with panellists emphasising that while initial costs could be high, the long-term benefits of improved data consistency and reduced reporting burdens make standardisation essential for the future of finance.
4. Adapting to Basel 3.1 and PRA Supervisory Shifts The fourth panel examined the regulatory shifts driven by Basel 3.1 standards and the changing supervisory approach of the Prudential Regulation Authority (PRA). Basel 3.1, which focuses on strengthening risk management by revamping how banks calculate risk-weighted assets, was discussed as a pivotal change for financial institutions. The panel also explored the ongoing debate between using internal models versus standardised approaches to assess risk, highlighting the need for accurate data to support these models. The PRA’s recent policy release emphasises the importance of adapting to these changes while acknowledging the nuances of different regulatory jurisdictions, presenting both challenges and opportunities for global banks.
5. Sustainable Finance: Paving the Way for ESG Compliance The forum closed with a panel on sustainable finance, moderated by Charlie Quarterman of Suade. Panellists stressed the importance of educating both board members and management teams on sustainable finance to future-proof their organisations. The lack of standardised data for Environmental, Social, and Governance (ESG) reporting was identified as a significant barrier to achieving effective compliance. Consistent metrics and global standardisation were seen as essential for enabling financial institutions to assess and compare risks related to sustainability. The discussion reflected a growing recognition that sustainable finance is not just a trend, but a core element of future regulatory frameworks.
The London RegTech Forum 2024 provided attendees with valuable insights into how RegTech, AI, and data are reshaping financial regulation. The forum underscored the critical need for collaboration between regulators and industry, as well as the necessity of data standardisation to ensure transparency and efficiency. With the introduction of Basel 3.1 and the increasing prominence of sustainable finance, financial institutions must continue to adapt to a rapidly evolving regulatory environment.
The latest from regulatory authorities across the globe.
European Banking Authority (EBA)
Token Redemption Guidelines for Issuers Amid Crises (9 October 2024) EBA issued final guidelines under the Markets in Crypto-Assets Regulation (MiCAR) outlining how issuers of asset-referenced and e-money tokens should manage redemptions during crises. The framework emphasises liquidity strategies and regulatory triggers, ensuring smoother redemption processes.
Basel III Reform Impact on EU Banks' Tier 1 Capital (4 October 2024) A report reveals that the capital shortfall for EU banks to meet Basel III reforms is minimal, with just €0.9 billion in Tier 1 capital needed. By 2033, Tier 1 requirements will rise by 7.8%, driven by the output floor and operational risk.
Credit Insurance and Credit Risk Mitigation (3 October 2024) Revisiting the role of credit insurance as a risk mitigation tool, EBA maintains that credit insurance should not receive special treatment under Basel III, ensuring a level playing field with other financial products offering dual recourse.
European Securities and Markets Authority (ESMA)
Accounting for Carbon Allowances in Financial Reports (8 October 2024) ESMA published guidelines on how European listed issuers should account for carbon allowances, enhancing transparency and consistency in financial reporting, particularly in compliance markets like the EU Emissions Trading System.
2025 Work Programme for ESAs (7 October 2024) The European Supervisory Authorities (ESAs) will focus on regulatory consistency, sustainability, and digital resilience. Key areas include sustainability disclosures, digital operational resilience, and addressing cross-sectoral risks.
Consultations on MiFID Transaction Reporting (3 October 2024) ESMA launched consultations on transaction reporting and order book data under the MiFID Review, seeking to streamline and harmonise data reporting and reduce burdens for market participants.
Bank of England (BoE)
Statistical Notice on BoE Levy (7 October 2024) The BoE Levy has been classified as "other taxes on production," with institutions required to report levy payments under updated guidelines. Resubmission of Q2 2024 reports is needed to include the levy.
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SIMEX 24: Testing Financial Resilience (2 October 2024) BoE conducted a market-wide simulation, SIMEX 24, testing the financial sector's resilience to operational disruptions. This exercise aims to enhance preparedness and ensure the sector can effectively manage shutdowns and restarts.
Conclusion of LIBOR Era (1 October 2024) The final synthetic LIBOR settings were published, marking the end of LIBOR. Market participants are encouraged to transition to risk-free rates, such as SONIA and SOFR, as part of efforts to maintain financial stability.
Federal Reserve
Threshold Increase for Higher-Priced Mortgage Loans (4 October 2024) The threshold for higher-priced mortgage loans will rise to $33,500 in 2025, aligning with CPI increases. These loans are subject to special appraisal requirements under the Truth in Lending Act.
Dollar Thresholds for Regulation Z and M (4 October 2024) In 2025, credit transactions and leases under $71,900 will be covered by Regulation Z and M protections, reflecting annual CPI adjustments.
Regulatory Relief for Institutions Affected by Hurricane Helene (2 October 2024) Regulatory bodies announced that institutions impacted by Hurricane Helene may receive assistance in meeting reporting obligations without penalties.
Securities and Exchange Commission (SEC)
Monitoring Impact of Hurricanes on Investors (9 October 2024) The SEC is closely monitoring the impact of hurricanes on markets and is considering relief for affected entities. Investors are warned to be cautious of potential scams linked to disaster recovery efforts.
Pump-and-Dump Scheme Charges (9 October 2024) The SEC charged executives of Minerco Inc. for defrauding investors in a multi-million dollar pump-and-dump scheme, falsely promoting the company as a leader in psilocybin mushroom research.
EDGAR System Enhancements (27 September 2024) SEC adopted amendments to improve the EDGAR system, introducing APIs for more efficient document submission and retrieval. A beta testing environment for these updates is now available.
Office of the Superintendent of Financial Institutions (OSFI)
Update on Basel III Capital Floor (2 October 2024) Canada delayed the increase of its Basel III capital floor from 67.5% to 70% until 2027, aligning with international timelines. The reforms remain capital neutral, ensuring stable implementation for Canadian banks.
Coming up...
Webinar
October 24th | 11:00AM - 12:00PM BST
The Bank of England's Prudential Regulatory Authority (PRA) has meticulously rolled out the Basel 3.1 Reforms in a phased approach. With Part 1 of the near-final Policy Statement PS17/23 already in place, a simpler set of standards (PS15/23) for Small Domestic Deposit Takers, and the imminent release of Part 2 addressing credit risk and the output floor, the comprehensive picture of Basel 3.1 is taking shape.
Meanwhile, the European Commission and Parliament have unveiled legislation implementing the Basel III Reforms in Europe through the CRR3/CRD VI directive.
This webinar aims to simplify the complex landscape of the UK Basel 3.1 Reforms, providing clarity and guidance for financial institutions.
Key topics covered:
Join us as we break down the complexities of Basel 3.1 and equip you with the knowledge needed to navigate this evolving regulatory environment.
Register for this webinar