Asia Pacific Financial Regulatory Update Q3 2024

AP regulators continue to enhance regulations related to governance and strategic / reputational risk. The Japan Financial Service Agency (JFSA) published a detailed report on financial product governance. The recommendations included expanding principles for arrangers and exploring the potential impact of shortening the stock settlement cycle. Discussions also revolved around the review of investment crowdfunding regulations and a reassessment of the "firewall regulation”. In India, the Reserve Bank of India (RBI) issued a Master Direction focused on "willful defaulters" to provide clear guidelines on classifying and addressing deliberate defaults, signalling a robust stance against threats to financial integrity.

AP regulators demonstrated an increase focus on reforms to their supervisory approach in Q3. The Australian Prudential Regulation Authority (APRA) released its Corporate Plan, outlining a strategic roadmap to uphold the stability and resilience of the country's financial institutions. The plan focuses on maintaining the strength of banks, insurers, and superannuation trustees, highlighting APRA's supervisory approach to ensure the soundness of the country’s financial sector. Meanwhile, in Mainland China, the National Financial Regulatory Administration (NFRA) initiated a public consultation on Compliance Management Measures for Financial Institutions aimed at establishing a comprehensive compliance management regime for Chinese firms.

AP regulators continue to put their focus on mitigating financial risk through the introduction of new, and enhancement of existing, regulatory frameworks. New Zealand's Financial Markets Authority (FMA) sought public input on proposed changes to Derivative Issuer licenses, particularly regarding leverage and investor suitability. This move reflected efforts to improve regulatory conditions and investor protection within the derivative trading space, highlighting New Zealand's commitment to fostering a more secure and transparent financial market ecosystem. In the Philippines, the Bangko Sentral ng Pilipinas (BSP) reduced reserve requirement ratios for banks demonstrated a strategic manoeuvre to address financial system distortions and enhance liquidity conditions.