Insights

In this issue:

• MFSA publishes the Fintech Sandbox Consultation Feedback
• ECB consults stakeholders on a guide on the assessment of counterparty credit exposure
• AML Alerts: Amendments to the Act and new Implementing Procedures Part II for the VFA Sector
• MFSA publishes a revised Corporate Governance Framework for Authorised Entities and Listed Companies in Stakeholder Consultation
• Moving closer to Deposit Guarantee Schemes Directive implementation – EBA issues final opinion
• Draft RTS on non-trading book positions issued by the EBA
• EBA recommends an update to the PSDII fraud reporting guidelines

MFSA publishes the Fintech Sandbox Consultation Feedback

The feedback statement to the July 2019 Consultation Document on Pillar 1 of the FinTech Strategy – Regulations, was just issued by the MFSA contemplating inter alia the rule on the implementation of the FinTech Regulatory Sandbox and outlining updates on other objectives relating to Pillar 1 of the Authority’s FinTech Strategy.
The draft MFSA Rule X of 2020 proposes six stages of the sandbox’s lifecycle: (a) Proposal Stage; (b) Selection Stage; (c) Application Stage; (d) Testing Stage; (e) Evaluation Stage; and (f) Exit Stage.

To be able to participate in the Sandbox, applicants must demonstrate to the Authority that:

1. the FinTech solution is innovative, technology-enabled and establishes new applications within the realm of financial services;
2. there is a need for testing the FinTech solution within a controlled environment;
3. the FinTech solution offer identifiable direct or indirect benefit/s to consumers of financial services and the wider financial services sector;
4. the applicant will have enough resources to operate throughout the duration of the sandbox.

MFSA consultation

ECB consults stakeholders on a guide on the assessment of counterparty credit exposure

The European Central Bank issued consultation on a guide relating to methodologies it uses to assess the models banks apply to calculate their exposure to counterparty credit risk. The guide which was drafted in cooperation with the national competent authorities also describes how the supranational bank will assess the methods that credit institutions uses to calculate the own funds required to counterbalance exposures associated with credit valuation adjustments.

ECB public consultation

AML alerts: Amendments to the Act and new Implementing Procedures Part II for the VFA Sector

The anti-money laundering local Authority has released the sector specific Implementing Procedures applicable to the Virtual Financial Assets industry which outline how VFA Agents, VFA Service Providers and VFA issuers have to mitigate, manage and address the inherent AML/CFT risks associated with the VFA sector.

Furthermore, the FIAU published a summary of the salient amendments to the Prevention of Money Laundering Act, Chapter 373 of the Laws of Malta which came into force on the 7th February 2020, upon the publication of the said Act No. I of 2020 in Government Gazette No. 20,344.

Implementing Procedures Part II for the VFA Sector

MFSA publishes a revised Corporate Governance Framework for Authorised Entities and Listed Companies in Stakeholder Consultation

A principles-based and high level Corporate Governance Code applicable to all MFSA licensed entities and Listed Companies is being proposed by the MFSA. MFSA Chief Executive Officer, Mr. Cuschieri commented that “We believe that the proposals set out in today’s publication will significantly raise the bar with respect to standards of Corporate Governance and set the tone in so far as the Authority’s expectations. We have put forward these proposals because we believe that the focus on Corporate Governance will have a positive effect on the financial services industry and will raise compliance standards across the board”. The Authority is seeking views on the best way to overhaul and augment existing corporate governance framework to up the governance standards by instilling a culture where good corporate governance is of utmost priority.

MFSA revised Corporate Governance Framework

Moving closer to Deposit Guarantee Schemes Directive implementation – EBA issues final opinion

The third EBA Opinion reviewing the implementation of the DGSD was recently published. With the objectives to boost depositor protection while enhancing financial stability and reinforcing financial resilience of DGSs, the Opinion namely proposes that there are clarifications as to what funds count towards DGS’s available financial means and the employment of DGS funds for failure prevention.

EBA opinion

Draft RTS on non-trading book positions issued by the EBA

The supranational banking Authority has published a consultation on the draft regulatory technical standards relating to the treatment of non-trading book positions subject to foreign-exchange risk or commodity risk under the ‘Fundamental Review of the Trading Book’ (FRTB) framework. The EBA consultation contemplates the methods as to how institutions are to calculate the own funds requirements for market risk for their non-trading book positions that are subject to foreign-exchange risk or commodity risk under the FRTB standardised and internal model approaches. The deadline for submitting proposals to the consultation is 10 April 2020.

EBA consultation

EBA recommends an update to the PSDII fraud reporting guidelines

European Banking Authority is proposing changes to its guidelines on fraud reporting, issued under the second Payment Services Directive. The main amendments namely revamp the reporting templates consequent to several clarifications recently published by the Commission on the uptake of strong customer authentication (SCA) to specific transactions. As a result of said clarifications and to ascertain that fraud data is reported consistently and correctly throughout all Member States, amendments to the Data Breakdowns introduced two new additional fields for reporting of ‘merchant initiated transactions’ and of ‘one-leg’ card-based payment transactions where SCA is not applied.

EBA updated guidelines

GANADO advocates’ 7th Annual Banking and Finance Law Seminar

The GANADO Advocates’ 7th Annual Banking and Finance Law Seminar will be organised in collaboration with Malta Bankers’ Association on the 12th March 2020.

Seminar details