2018/2019 Edition of the Global Regulatory Update

Global Regulatory Update  | Corporates Edition 69 ASIA 1) Recovery & Resolution Planning: Asia Developments A number of Asian countries have set out requirements that banks submit ‘living wills’ to relevant regulatory agencies that contain strategic analysis of how a distressed or failing institutions could be resolved in a way that does not pose systemic risk to the financial system. Domestically systemically important banks (D-SIBs) have also been designated in some markets if the entity is judged to post local systemic risk. Sometimes global systemically important banks (G-SIBs) are designated but not always. Hong Kong Monetary Authority (HKMA) published a consultation paper on rules setting out loss absorbing capacity (LAC) on 18 January 2018. The HKMA intends to produce additional rules and regulations to be made as subsidiary legislation and guidance as code of practice to fully implement the Financial Institutions (Resolution) Ordinance and provide guidance on its application. A consultation on the code of practice is expected by mid-2018. The HKMA also intends to consult on the revision of its Supervisory Policy Manual (SPM) on recovery planning in the second half of 2018. In India, the Financial Resolution and Deposit Insurance Bill, 2017 (FRDI) has been referred to a Joint Parliamentary Committee of both Houses for examination. The proposed Bill seeks to provide for the resolution of financial service providers in distress, deposit insurance to consumers of financial services, designation of systemically important financial institutions, and establishment of a Resolution Corporation for protection of consumers of specified service providers. The Bill together with the Insolvency and Bankruptcy Code, 2016 is expected to provide a comprehensive resolution mechanism for the Indian economy. The Lok Sabha (Lower House of India’s Parliament) granted extension twice on 18 December 2018 and 16 March 2018 for the Joint Committee on The Financial Resolution and Deposit Insurance Bill, 2017 (FRDI Bill) to present its report on the Bill. The joint committee of Parliament can now submit its report up to the last day of the Monsoon Session 2018, according to the motion adopted by the Lok Sabha. The FRDI Bill may therefore not be introduced in Parliament until mid/end-2018. 2) Benchmarks The E.U. Benchmark Regulation (BMR), which came into effect on 1 January 2018, will impact benchmark administrators and users of benchmarks outside of the European Union (E.U.) including the Asia Pacific (APAC) region as well as end-users in rope. The BMR prohibits E.U. regulated entities (e.g. banks. asset managers, funds, intermediaries and