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Regulation round-up: March

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Here is our regulatory round-up for March:

EU prepares technical standards for DORA

At a Rome conference organised by CONSOB – the Italian securities market regulator, European Securities and Markets Authority chair Verena Ross provided an update on the progress of the EU Digital Operational Resilience Act (DORA).

Supervisory authorities of EU member nations are jointly drafting technical standards which will bring “the technical precision needed for the new rules to operate as effectively as possible” she said.

Ross added “DORA sets stretching deadlines for the ESAs [European Supervisory Authorities]  to issue these technical standards, which is why we are working so intensively from the outset. A still greater challenge will be to implement DORA once it enters into application, to make the EU financial sector more secure and resilient”.

“The industry and we as their supervisors will have to adapt to many new practices and rules, and we will have to integrate DORA oversight into the existing supervisory processes. In addition, given the fast-changing nature of digital innovation, we will continually need to ensure we have the right supervisory skills for the job”.

The EU Digital Operational Resilience Act came into force on January 16th this year and will apply from January 17th, 2025.

The full speech from the CONSOB conference is available here.
 

Digitalisation monitoring survey launched

The European Insurance and Occupational Pensions Authority (EIOPA) has launched a Digitalisation Market Monitoring Survey which it says is intended to: “Monitor the development of European insurers’ digital transformation strategies and better understand how undertakings use or plan to use innovative business models and technologies”.

EIOPA says it hopes to gain insight on the use and level of deployment of technological innovation in the European insurance sector, as well as the governance measures that insurers are adopting around them.

The survey is open until June 30th, 2023 and is available here.

European Risk Board encourages cyber testing

In a recent report titled Advancing Macroprudential Tools for Cyber Resilience, the European Systemic Risk Board (ESRB) has encouraged member states to adopt its cyber resilience scenario testing (CyRST) tool which it claims can help assess the degree to which: “The financial system can swiftly and efficiently respond to and recover from a severe but plausible cyber scenario that causes significant disruption and could affect financial and operational stability”.

The ESRB claims that the new CyRST tool bridges a gap in the current analytical toolkit that can be used to assess operational resilience in the face of a cyber scenario. It says that CyRST can provide such insight by: “Designing a hypothetical cyber scenario and asking participating firms to document the scenario’s impact, how they would respond to and recover from it, and the extent to which key economic functions could continue to operate under the scenario”.

“The test is used to evaluate the overall impact of the scenario on financial and operational stability and to identify areas where further work is required to mitigate risks”.

Full report available here.
 

Reserve Bank of India suggests self-regulation for FinTechs

Shri M K Jain, Deputy Governor of the Reserve Bank of India has has suggested Indian FinTechs create a self-regulatory organisation.

In a recent speech he warned against both a regulatory regime that was too “hands-off” in its approach to FinTechs, as well as one in which: “Fintech product and services are regulated in the same way as the traditional financial product or service”. Instead, he proposed that the Indian FinTech sector should: “Attempt to organise itself under a self-regulatory organisation which in turn can monitor the conduct of member FinTech entities”.

This body should stick to three key principles to ensure customer protection, Jain added:

  • Design customer-centric products that avoid passing fintech induced losses on to customers.

  • Ensure customer suitability and appropriateness, by refraining from mis-selling or imprudent lending.

  • Address any inherent biases present in models in a fair manner.

The full speech is available here.

 

[Image Source: XBRL]