Key Regulatory Topics: Weekly Update 20 October – 26 October 2023
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News: 01 March 2024
Publications: 27 February 2024
Publications: 23 February 2024
Publications: 22 February 2024
The FCA and PRA this week published a joint policy statement on the ratio between fixed and variable components of total remuneration and their removal of the ‘bonus cap’.
Separately, the FCA published a statement warning firms about common issues it has identified with cryptoasset financial promotions. The FCA reports in its regulation round-up that within 24 hours of the new rules being in effect, it had issued 146 warnings.
Since the regime went live, it has now issued 221 alerts. In the EU, a number of the updates relate to the progress of various legislative files including a directive concerning financial services contracts concluded at a distance and a regulation creating a European green bond standard. The Delegated Regulation extending the transitional period laid down for third-country benchmarks in the Benchmarks Regulation was also published in the OJ.
Please see the ‘Sustainable Finance’ section for an update on the new regulation adopted by the Council of the EU to promote sustainable finance.
ECON agrees amendments to streamline the listing process and make it more proportionate
On 24 October, the EP announced that its Economic and Monetary Affairs Committee (ECON) had in three separate votes adopted changes to EU legislation that would enable companies to access funding sources other than bank lending, and to adapt their financing structure when they grow in size. The first text the MEPs agreed upon amends the MiFID rules on provision of investment research by third parties, in order to revitalise this market and make listed companies more visible. The second text amends the Prospectus Regulation, MAR and MiFIR, to reduce the content, introduce a maximum page limit and a standardised format of the EU Follow-on prospectus and the EU Growth prospectus. It also provides member states the discretion to decide not to require a prospectus where the total aggregated consideration in the EU for the securities offered is less than EUR 5 000 000 per issuer, calculated over a period of 12 months, up to a threshold of EUR 12 000 000. The third text is a new Directive on multiple-vote share structures, which requires SMEs and family owned companies trading on public markets to have a stock name that ends with the marker ‘WVR’ (weighted voting rights) to clearly indicate to the public that their shareholder structure and liquidity profile is different to that of traditional companies. In addition, safeguards are proposed to protect the interests of the shareholders who do not hold multiple-vote shares. ECON is now ready to begin negotiations with the Council of the EU, which has already agreed its mandate on the three texts.
Conduct and governance
Joint FCA and PRA policy statement on ratio between fixed and variable components of total remuneration
On 24 October, the FCA and PRA published a joint policy statement on the ratio between fixed and variable components of total remuneration (the ‘bonus cap’). The statement provides feedback to the responses received to the joint consultation paper on the same topic, as well as confirming that the regulators will be removing the bonus cap that currently applies to UK banks, building societies and PRA-designated investment firms. The changes aim to remove unintended consequences of the bonus cap, in particular, the growth in the proportion of the fixed component of total remuneration, which reduces a firm’s ability to adjust variable remuneration to absorb losses or for material poor performance or misconduct that subsequently comes to light. In the statement, the regulators explain that they want to strengthen the effectiveness of the remuneration regime by increasing the proportion of compensation that can be subject to the incentive setting tools within the remuneration framework. The appendices to the statement include: (i) appendix 1, which makes changes to the Remuneration Part and the Disclosure (CRR) Part of the PRA Rulebook; (ii) appendix 2, which makes changes to the Senior Management Arrangements, SYSC 19D: Dual-regulated firms Remuneration Code; and (iii) appendix 3, which updates the PRA’s supervisory statement 2/17 – Remuneration. The requirements will come into effect on 31 October and, in a change to the consultation proposals will apply to current and future performance years.
Council of EU adopts directive on financial services contracts concluded at a distance
On 23 October, the Council of the EU adopted a directive concerning financial services contracts concluded at a distance. The directive repeals the existing legislation from 2002 and introduces new provisions for financial services contracts concluded at a distance as an additional chapter of the consumer rights directive, which protects consumers in all kinds of commercial practices. The final text: (i) clarifies the scope of application and the safety net-feature for financial services; (ii) improves the rules on information disclosure and modernises pre-contractual information obligations; (iii) establishes the right of consumers to request human intervention on sites that display automatic information tools like robo-advice or chatbots; (iv) facilitates the right of withdrawal from contracts concluded at a distance through an easy-to-find 'withdrawal function' in the provider's interface; and (v) introduces additional protection for consumers from dark patterns. Once the directive is signed by the President of the EP and the President of the Council, it will be published in the OJ and will enter into force on the twentieth day following its publication.
Financial crime and sanctions
Economic Crime and Corporate Transparency Bill receives Royal Assent
On 26 October, the Economic Crime and Corporate Transparency Bill was given Royal Assent and is now an Act. It was published on legislation.gov on the same day. The Economic Crime and Corporate Transparency Act 2023 seeks to: (i) prevent organised criminals, fraudsters, kleptocrats and terrorists from using companies to abuse the UK’s open economy; (ii) strengthen the UK’s broader response to economic crime; and (iii) support enterprise by enabling Companies House to deliver a better service.
FCA new webpage on Cryptoasset registration: information for applicants
On 26 October, the FCA published a new webpage on cryptoasset registration: information for applicants. The webpage provides applicants with more information on the FCA’s requirements and expectation of cryptoasset businesses for AML/CTF regime registration. It sets out the typical questions applicants have about getting their registration ready, associated individuals, and what happens once an application has been submitted.
FCA, PRA and BoE publish joint feedback statement on AI and machine learning
On 26 October, the FCA and the BoE (including the PRA) published a joint feedback statement on AI and machine learning. The statement summarises the responses the regulators received to their joint discussion paper (DP5/22) published in October 2022 as far as they concern the matters raised in the paper. It does not include policy proposals, nor does it signal how the supervisory authorities are considering clarifying, designing, and/or implementing current or future regulatory proposals on this topic. Key points made by respondents include: (i) many thought that a regulatory definition of AI would not be useful, many pointing to the use of alternative, principles-based or risk-based approaches to the definition of AI with a focus on specific characteristics or risks posed or amplified by AI; (ii) due to the rapidly changing nature of AI, regulators could respond by designing and maintaining ‘live’ regulatory guidance i.e. periodically updated guidance and examples of best practice; (iii) a key focus of regulation and supervision should be on consumer outcomes, especially with respect to ensuring fairness and other ethical dimensions; (iv) data regulation, in particular, is fragmented, and more regulatory alignment would be useful in addressing data risks, especially those related to fairness, bias, and management of protected characteristics; and (v) existing firm governance structures (and regulatory frameworks such as the SMCR) are sufficient to address AI risks.
FCA warns about common issues with crypto marketing
On 25 October, the FCA published a statement warning firms about common issues it has identified with cryptoasset financial promotions. From 8 October, the FCA has been supervising firms against the new regime that is designed to give consumers the right information and risk warnings. The three common issues the FCA identified with financial promotions are: (i) promotions making claims about the ‘safety’, ‘security’ or ease of using cryptoasset services without highlighting the risk involved; (ii) risk warnings not being visible enough due to small fonts, hard-to-read colouring or non-prominent positioning; and (iii) firms failing to provide customers with adequate information on the risks associated to specific products being promoted. The FCA expects authorised firms approving the financial promotions of cryptoasset firms to take their regulatory obligations seriously and warns that where this is not happening it will take action. Although, the FCA does note that where firms are engaging with them in good faith with a view toward achieving compliance, they are taking a proportionate approach to implementation.
EBA and ESMA consult on joint guidelines on suitability assessments under MiCAR
On 20 October, the EBA and ESMA published a consultation on two draft joint guidelines on: (i) the suitability assessments of members of the management body of issuers of asset-referenced tokens (ARTs) and of cryptoasset service providers (CASPs), and (ii) the suitability assessment of shareholders and members, whether direct or indirect, with qualifying holdings of issuers of ARTs and of CASPs. The guidelines aim to provide clarity and harmonisation with respect to the criteria used to assess the suitability of the management body, the shareholders and members with qualifying holdings, in turn reducing the risk of arbitrage in the application of the rules. ESMA and the EBA explain that in order to foster and protect the integrity of the market in cryptoassets and related services and to promote trust, it is important to ensure that the members of the management body of issuers of ARTs and CASPs as well as the persons that hold or wish to acquire qualifying holdings in them are suitable. The draft joint guidelines on the suitability assessment of the members of the management body of issuers of ARTs and CASPs provide common criteria to assess the appropriate knowledge, skills and experience of members of the management body as well as their good repute, honesty and integrity and if they are able to commit sufficient time to perform their duties. The draft joint guidelines on the suitability assessment of shareholders or members, whether direct or indirect, with qualifying holdings in issuers of ARTs or CASPs provide competent authorities common methodology to assess the suitability of the shareholders and members with direct or indirect qualifying holdings for purposes of granting authorisation as issuers of ARTs or as CASPs, and for carrying out the prudential assessment of proposed acquisitions. The deadline for comments is 22 January.
Markets and markets infrastructure
ESA’s Joint Board of Appeal suspends the decision by ESMA to withdraw the recognition decision of DCCC
On 25 October, the ESA’s Joint Board of Appeal heard the application for suspension brought by Dubai Commodities Clearing Corporation (DCCC) against the ESMA Decision, adopted under Article 25p of EMIR, to withdraw the recognition of DCCC as a Tier 1 third-CCP. DCCC challenged ESMA’s Decision, asking the Board to extend the adaptation period and to suspend the withdrawal Decision until the outcome of the appeal is concluded. The Board found that the appeal case is admissible and suspended the ESMA Decision.
UK SFTR Errors and Omissions Form
On 23 October, the FCA updated its webpage on the UK SFTR, stating that it has published a new UK SFTR Errors and Omissions Form. Going forward, the FCA requests that firms use the new form to notify the FCA about any errors or omissions in their securities financing transaction reports pursuant to Article 4 of UK SFTR. Firms are expected to notify as soon as practicably possible following identification of any errors and/or omissions with their UK SFTR reporting. The updated webpage also notes that the FCA has published final versions of the UK SFTR Validation Rules and XML schemas on its UK SFTR reporting webpage, the changes to the Validation Rules and XML schemas will be applicable from 25 November 2024.
Delegated Regulation extending transitional period for third-country benchmarks under BMR
On 23 October, the Delegated Regulation extending the transitional period laid down for third-country benchmarks in Article 51(5) of the Benchmarks Regulation (BMR) was published in the OJ. In a July report the EC concluded that a majority of third-country benchmark administrators have not taken the necessary steps to prepare for the end of the transition period on 31 December. Therefore, in order to ensure continued access by EU supervised entities to benchmarks provided by an administrator located in a third country, the EC has decided that it is necessary to extend the transitional period by two years, to 31 December 2025. Without this extension the EC believes that market participants in the EU would be at a significant disadvantage in global competition. The Delegated Regulation enters into force on 27 October, the third day following its publication in the OJ.
Payment services and payment systems
BoE speech on money and payments
On 26 October, the BoE published a speech by Sir Jon Cunliffe, Deputy Governor for Financial Stability on money and payments. In this speech Mr Cunliffe recalls Facebook's announcement in 2019 that it was launching a digital currency and the three areas where this galvanised more urgent action by authorities. The first being the G20 roadmap to improve cross-border payments. Mr Cunliffe discusses the work the FSB, CPMI and others had done to develop a roadmap to enhance global cross-border payments since 2020. He believes they have built a strong, detailed, analytical foundation for the work, producing a number of reports, analysing the key frictions and the actions for the public and private sector, in partnership, that are necessary to alleviate them. However, he notes, there is still a long way to go. Secondly, he goes on to address the BoE’s exploration of a CBDC, Mr Cunliffe explains that the BoE and HMT consultation into the design of a digital pound launched in February has stimulated a strong response. Responses falling into two categories; the majority express general, high-level concerns about three broad issues – privacy, programmability and the decline of cash, while the second, smaller category of responses comprises detailed comments on the proposed platform model and certain other key design features. He explains that the BoE and HMT expect to publish a detailed response to the consultation in the coming months addressing both topics. The third and final area of action is the regulation in the UK of systemic payment systems using stablecoins. Mr Cunliffe is of the view that there is a strong case for regulation of stablecoin markets, to protect investors, ensure market integrity and prevent their use for illicit finance. As such the BoE will soon issue a discussion paper setting out its proposed regulatory regime for systemic retail payment systems using stablecoins. He goes on to explain how the BoE has approached the key issues and how it sees the new regulatory regime fitting in alongside other regulatory regimes to avoid regulatory arbitrage. In concluding, Mr Cunliffe discusses the role of central banks and how they ensure that money ‘works’. This is Mr Cunliffe’s final speech in his position as Deputy Governor for Financial Stability.
Draft Payment and Electronic Money Institution Insolvency (Amendment) Regulations 2023
On 25 October, HMT published a draft of the Payment and Electronic Money Institution Insolvency (Amendment) Regulations 2023. The instrument extends the application of the insolvency regulations for the special administration procedure established by the Payment and Electronic Money Institution Insolvency Regulations 2021. This extension relates to institutions formed in Northern Ireland and limited liability partnerships formed in Scotland. This SI does not apply the insolvency procedure to Scottish partnerships as they are sequestrated under the Bankruptcy (Scotland) Act, which is a devolved matter for the Scottish Government.
PSR guide for PSPs on publishing APP fraud data
On 24 October, the PSR published a guide for PSPs on APP fraud data. Under Specific Direction 18, the PSR requires certain PSPs to publish data on APP fraud. The PSR is requiring those directed PSPs to publish data on APP fraud, as it will: (i) provide greater transparency about PSPs’ performance, making them more accountable; (ii) improve the level of reimbursement for APP fraud victims; and (iii) create reputational incentives for PSPs to implement further fraud prevention measures. This guidance will assist PSPs in publishing the correct information, as the guide explains the content that must be included as part of this data requirement, the format that must be used and the timescales that must be followed. Non-directed PSPs do not have to publish the data but if they choose to do so, should do so in way consistent with the guidance.
PRA policy statement on updating UK Technical Standards on the identification of G-SIIs
On 24 October, the PRA published a policy statement on updating UK Technical Standards on the identification of G-SIIs. The statement provides feedback to the responses the PRA received to its CP16/23, where the PRA proposed to align the UK Technical Standards with updates made to the BCBS framework. The statement also includes the PRA’s final policy for amendments to the UK Technical Standards, which can be found in appendix 1. The statement is relevant to PRA-authorised UK headquartered banks, building societies, PRA-designated UK headquartered investment firms, and their qualifying parent undertakings. It is particularly relevant to UK headquartered firms in scope of supplementary reporting for the purposes of identifying and assigning G-SII buffer rates. The amended UK Technical Standards will take effect on 31 October.
EC adopts RTS on calculating the stress scenario risk measure under CRR
On 20 October, the EC adopted a Delegated Regulation on RTS on calculating the stress scenario risk measure under the CRR. The RTS set out two overarching methods to develop the extreme scenarios of future shock for non-modellable risk factors: (i) the direct method, which requires institutions to develop the extreme scenario of future shock for a given non-modellable risk factor by calculating the expected shortfall measure of the losses occurring when varying that risk factor according to its historically observed levels during a stress period; or (ii) the stepwise method, which requires institutions to obtain the extreme scenario of future shock for a given non-modellable risk factor by calculating an expected shortfall measure on the returns observed for that risk factor, and calculating the loss corresponding to the movement in the risk factor identified by that expected shortfall measure. Under both methods, the RTS require institutions to adjust the extreme scenario of future shock to reflect the statistical uncertainty in determining the extreme scenario of future shock by introducing an uncertainty compensation factor. The Delegated Regulation will enter into force on the twentieth day following its publication in the OJ.
ECB final report on sound practices in counterparty credit risk governance and management
On 20 October, the ECB published its final report on sound practices in counterparty credit risk governance and management. The report presents the findings of the targeted review the ECB performed in the second half of 2022 on how banks govern and manage counterparty credit risk, highlighting sound practices observed in the market and points to areas where improvement is needed. Institutions are expected to consider the sound practices discussed in the report when designing their approach to counterparty credit risk management. In addition, the ECB also published a feedback statement providing an overview of the comments received to its consultation on the draft report in June and its assessment of them. The statement emphasises that proportionality is an overarching principle applicable to all sound practices, while considering the different organisational set-ups, areas of activity and risk profiles of the institutions under the ECB’s supervision.
Regulatory reform post Brexit
Government update on the delivery of the Edinburgh Reforms
On 25 October, HMT published a letter (dated 6 October) from Jeremy Hunt, Chancellor of the Exchequer, to Harriet Baldwin, Chair of the House of Commons Treasury Committee, providing an update on the delivery of the Edinburgh Reforms. The letter is a response to a letter (dated 6 September) Ms Baldwin sent to the Chancellor requesting an update. Mr Hunt explains that the Government has already delivered many of the commitments set out in the Edinburgh Reforms and implementation continues at pace. The letter also includes a table setting out a summary of the Edinburgh Reforms implementation, areas that the table notes are still in progress include: (i) reforming the ring-fencing regime for banks; (ii) repealing the PRIIPs Regulation and consulting on a new direction for retail disclosure; (iii) delivering the outcomes of the Secondary Capital Raising Review; and (iv) implementing a financial market infrastructure sandbox (FMI Sandbox).
Please see the ‘Other Developments’ section for the FCA October regulation round-up which discusses the FCA’s GFIN Greenwashing TechSprint winners.
ESMA fact-finding exercise on corporate reporting practices under the Taxonomy Regulation
On 25 October, ESMA published a summary of findings from its fact-finding exercise on corporate reporting practices under the Taxonomy Regulation. As part of its objective to coordinate European supervision and enforcement activities related to disclosures under the Taxonomy Regulation, ESMA has collected information from national enforcers with respect to the Fiscal Year 2022 non-financial statements published by European nonfinancial undertakings listed in regulated markets. The focus of this fact-finding exercise was to evaluate the quality of the disclosures with which issuers have responded to the new requirements. Key findings include: (i) almost all issuers, selected by the national enforcers among those being active in four main sectors covered by the Taxonomy Climate Delegated Act, disclosed the required Taxonomy alignment KPIs; (ii) the reporting templates have generally been used, but for 30% of the sample they were either modified or not fully completed, which may impact comparability and make access to the data more difficult for users; and (iii) at least some of the mandatory qualitative information regarding the issuers’ assessment of their compliance with transparency requirements in relation to the nature of their activities, the technical screening criteria, the Do No Significant Harm criteria, and the minimum safeguards, was missing or insufficient for more than 40% of the assessed issuers. In addition, only 40% of the sample provided comments on their eligibility or alignment rates. Going forward, ESMA may conduct further analysis on the areas of the reporting for which more clarity is necessary or for which material incorrect application has been identified.
ESMA publishes report on disclosures of climate-related matters in financial statements
On 25 October, ESMA published a report on disclosures of climate-related matters in financial statements. The report aims to assist and to enhance the ability of issuers to provide more robust disclosures and create more consistency in how climate-related matters are accounted for in financial statements drawn up in accordance with IFRS. However, ESMA points out that the report does not set out best practices or prescribe the way in which the disclosure of climate-related matters should be made in the financial statements. The first three sections of the report outline the background, objectives as well as scope and methodology. The report then focuses on topics for which it is likely that climate-related matters have a higher impact. In doing so, ESMA highlights, in each example, key aspects and provides insights that explain why such disclosures may be useful to users of financial statements. Finally, each section includes ESMA’s observations on areas of continued focus. ESMA expects issuers and auditors to consider the illustrative examples of this report when considering how to assess and disclose the degree to which climate-related matters play a role into the preparation and auditing of IFRS financial statements. ESMA also stresses that the guidance addressing climate impacts is not exhaustive and is developing at a fast pace. Issuers should closely follow the developments of standard setters in this area, and their connection with sustainability reporting.
Council of the EU adopts new regulation to promote sustainable finance
On 24 October, the Council of the EU announced that it had adopted a regulation creating a European green bond standard. The regulation lays down uniform requirements for issuers of bonds that wish to use the designation ‘European green bond’ or ‘EuGB’. European green bonds will be aligned with the EU taxonomy for sustainable activities and made available to investors globally. The Council explains that the regulation is a further step in implementing the EU’s strategy on financing sustainable growth and the transition to a climate-neutral, resource-efficient economy. It believes that the new standard will foster consistency and comparability in the green bond market, benefitting both issuers and investors of green bonds, as the regulation establishes a registration system and supervisory framework for external reviewers of European green bonds. In the hopes of preventing greenwashing in the green bonds market in general, the regulation also provides for some voluntary disclosure requirements for other environmentally sustainable bonds and sustainability-linked bonds issued in the EU. The regulation was adopted by the EP on 5 October, it will now be signed and published in the OJ, entering into force on the twentieth day following its publication. It will start applying 12 months after its entry into force.
EC notices containing FAQs on technical screening criteria and sustainability disclosures under EU Taxonomy legislation
On 20 October, two EC notices were published in the OJ on: (i) the interpretation and implementation of certain legal provisions of the EU Taxonomy Climate Delegated Act establishing technical screening criteria for economic activities that contribute substantially to climate change mitigation or climate change adaptation and do no significant harm to other environmental objective (C/2023/267); and (ii) the interpretation and implementation of certain legal provisions of the Disclosures Delegated Act under Article 8 of EU Taxonomy Regulation on the reporting of Taxonomy-eligible and Taxonomy-aligned economic activities and assets (C/2023/305). The notices contain responses to FAQs relating to the Taxonomy Regulation.
FCA October regulation round-up
On 26 October, the FCA published a regulation round-up for October. In the round-up, the FCA highlights the improvements it has made to the authorisation process making it quicker and easier for firms and people to apply. Following feedback that the FCA application forms can be complicated and difficult to use, the FCA has decided to improve its forms starting with Form A to support quicker assessments and determinations. Once the FCA has completed the roll-out of improvements to Form A, it intends to make changes to other application forms. The FCA also uses the round-up to remind firms that they need to attest their Appointed Representatives (AR) details. From December, if firms have ARs they must confirm their details when completing the annual Firm Details Attestation (FDA). Firms must attest the details of all ARs including: (i) if they have more than one principal; (ii) their details haven’t changed from last year or have been recently updated; and (iii) FDAs must be completed within 60 business days of the firm’s Annual Referencing Date. Failure to report will incur a late return notification, £250 late return fee, and possible enforcement action. The round-up also links to the FCA webpage announcing the FCAs GFIN Greenwashing TechSprint winners. The FCA explains that for the past 3 months it has successfully led a group of 15 international regulators and 13 innovative firms to collaboratively identify and develop technological solutions to help regulators, or the market, more effectively tackle or mitigate the risks of greenwashing in financial services.
FMLC letter to the HMT on FCARs
On 25 October, the Financial Markets Law Committee (FMLC) published a letter to HMT on issues of legal uncertainty in relation to security-based collateral structures under the Financial Collateral Arrangements (No. 2) Regulations 2003 (FCARs). In the letter the FMLC explains that the interpretation of certain elements of the FCARs has remained an area of legal uncertainty for a number of years. The main issue with the FCARs relates to a lack of comfort that structures not involving title transfer, such as pledges, mortgages, other security interests, fall within the scope of the FCARs and are therefore subject to its protections. The FCARs are listed in Schedule 1 of FSMA 2023 and will therefore be revoked in due course. The FMLC feels that HMT should use the opportunity to ensure that the replacement legislation for the FCARs clarifies the areas of uncertainty. The letter sets out the areas of uncertainty, their impact on the market and suggested drafting to mitigate such uncertainties.
FCA publishes sample business plan
On 25 October, the FCA published a new webpage on a sample business plan. The page aims to help firms applying for authorisation, learn how to put together a regulatory business plan (RBP). The FCA explains that if firms follow the advice, it will help ensure that they are ready, willing and organised to be authorised. Although, the FCA does note that RBP’s should not be generic but must be tailored to the specific business model and that the list of areas to address is not exhaustive, reminding firms that there may be additional factors depending on their type and the permissions they are applying for.
FCA published findings of review of rules extending SME access to the FOS
On 24 October, the FCA published a feedback statement setting out the findings of its review of rules and whether changes needed to be made to allow larger SMEs access to the Financial Ombudsman Service (FOS). Currently, SMEs are able to access the ombudsman service if they have a turnover of less than £6.5 million and fewer than 50 employees, or a balance sheet total of less than £5m. These thresholds cover 99% of the 5.6 million private sector businesses in the UK. Following its review, the FCA has decided that the current level of coverage remains appropriate and that it would not be proportionate to extend access to SMEs larger than the current criteria and it will not, therefore, be amending its SME definition.
Joint EU-UK Financial Regulatory Forum publishes joint statement
On 23 October, the Joint EU-UK Financial Regulatory Forum published a policy paper setting out a joint statement from HMT and the EC on what was covered at the first EU-UK Financial Regulatory Forum held on 19 October. The forum was established following the signing of the UK-EU Memorandum of Understanding on Financial Services Cooperation on 27 June (MoU). As it was the forum's first meeting, participants provided views on the organisational aspects and practical arrangements for the future of regulatory cooperation under the MoU, including how the forum could be used to exchange views on subjects including: financial stability risks; implementation of relevant international regulatory standards in the financial services sector; regulatory developments in financial services; and the respective policies, rules and processes concerning deference regimes, such as equivalence, or other tools used to address cross-border issues; and efforts to prevent and combat money laundering and terrorist financing.. Other topics of discussion include: (i) addressing vulnerabilities in NBFI, participants agreed that in order to address vulnerabilities in NBFI and enhance the resilience of the sector, it is critical to finalise and implement international reforms. Participants shared their respective positions on the ongoing FSB work aiming to promote the implementation of the FSB MMFs policy proposals and addressing structural liquidity mismatches in OEFs; (ii) digital finance, the UK and EU provided updates on developments concerning cryptoassets, stablecoins, and retail CBDCs in particular on their respective legal and regulatory frameworks. Participants noted the importance of jurisdictions implementing the FSB’s high-level recommendations on crypto-asset activities and stablecoins; and (iii) sustainable finance, participants discussed how best to progress multilateral efforts to support an orderly transition to net zero, including participation in the G20 Sustainable Finance Working Group, among other fora. The next meeting of the forum is expected to take place in spring 2024.