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The APAC Regulatory Landscape

February 27, 2023

The APAC Regulatory Landscape

2022 Sets The Stage For Five Big 2023 Developments

Even as the world was just emerging after months of global lockdowns in 2022, instrumental changes were taking place in the Asia-Pacific world of regulations, triggering the need for a strategic platform transformation. With all the preparations now in place, institutions are ready to address these requirements. But in this ever-changing regulatory environment, there is always something new around the corner. As 2023 heats up there are five strategic initiatives financial institutions must respond to.

The Start of the Granular Reporting Journey

APAC regulators led the global transition of the compliance landscape to become more data-driven with the rollout of several granular reporting programs throughout the region, including:

Australian Prudential Regulation Authority (APRA): Published a consultation and a response paper on “Comprehensive Data Collection” – a five-year program that sets out its changing approach towards collecting richer data through APRA Connect, its new system.
Bank of Thailand (BOT): Began implementing a multi-year program called “Regulatory Data Transformation,” to replace its form-based reporting.
China regulators: As early adopters of granular reporting, continue to push the scope of its expansion in 2023.
Hong Kong Monetary Authority (HKMA): Began accepting submissions of four data catalogs as part of the granular data reporting (GDR) program. The program will be expanded in the coming years to include a more comprehensive data collection.
Monetary Authority of Singapore (MAS): Adopted a hybrid strategy, combining granular data points with some aggregated numbers, as evidenced by the consolidation of three reports into the Top Borrower’s Group Survey.

RegTech Drives Cloud/SaaS Adoption And Digital Transformation

Rapid development in the regulatory landscape has enabled financial institutions to engage new technologies and accelerate their compliance time-to-market even as regulatory requirements continue to mount. RegTech innovation and growth have been key to this trend.

Australia, Hong Kong, and Singapore continued proving themselves to be leaders and early adopters of RegTech in the region. MAS set aside financial grants for institutions to facilitate this adoption and HKMA’s Fintech 2025 strategy encourages the industry to leverage innovative RegTech technologies as part of their digitalization strategy.
A significant number of financial institutions, particularly in countries like Australia, Hong Kong, and Singapore, began cloud-adoption journeys for optimizing their compliance ecosystems.
Accelerated approvals of digital banking licenses in fast-growing economies like Malaysia and Philippines spurred a strong interest in leveraging RegTech expertise to meet new reporting requirements.

Regulatory-Driven Data Collection Initiatives

All major APAC regulators are undergoing a technology transformation including the following.

APRA: Began transitioning to the new APRA Connect data collection system, to be completed by 2027, allowing the authority to fully decommission its Direct to APRA (D2A) legal data collection tool.
BOT: Published the initial draft of specs for collecting data through API integration with financial institutions, as part of the Regulatory Data Transformation (RDT) program.
Bangko Sentral ng Pilipinas (BSP): Launched pilot projects for report collection through XML.
MAS: Implemented the data collection gateway as part of the balance sheet-report transformation.

The move towards data-driven regulation necessitates stronger data collection and better integration with financial institutions.

Finalizing and Implementing Basel Reforms

Following years of consultation, core markets such as Australia, Hong Kong, Malaysia and Singapore announced the finalized Basel III-aligned set of reforms with localized rules on top of BCBS Principles. The modified implementation timeline looks set to take effect from 2023 to 2025, presaging a very busy 2023 as ambitious projects launched over the last couple of years move to advanced stages.

2023 Is Here! Now What? Five Big Topics

With all the 2022 preparations in place, institutions are ready to address these requirements. But in this ever changing regulatory environment, there is always something new around the corner.

For 2023, these are five of the important topics facing APAC financial institutions:

Regulatory Landscape Automation
Some APAC regulators – including APRA, CBIRC, HKMA, MAS, and RBI – have rolled out transformation programs over the last 3–5 years, triggering a wave of automation in financial institutions in their respective countries. Other regulators in the region are expected to announce similar regulatory and collection platform changes that will enable banks to optimize the compliance landscape and provide more meaningful data, more quickly.
Financial institutions will take this opportunity to review their regulatory systems and get ready for a quicker adoption of regulatory changes.

Continued Regulatory Push For Granular Data Reporting

Regulators have ramped up GDR requirements across the region, including:

APRA	Kicks off a multi-year program to develop richer and more flexible data collections and implement them into APRA Connect. It will also start collecting data, as part of the comprehensive data collection. Changes to the capital framework, including: Operational risk capital Interim credit collection
BOT	RDT goes live for Phase 1 The scope of expansion is set for Phase 2
HKMA	Expands the scope for more financial institutions, and potentially more product lines.
OTHER	Banking-industry data-collection initiatives will be phased in overtime according to roadmaps published by APRA. Comprehensive credit collection Comprehensive liabilities collection Market risk, balance sheet, and P&L Cross industry

Basel Reforms In More Jurisdictions
Regulators from developing markets in the region are looking to announce localized Basel reforms to be mandated between 2024 and 2026.
Cloud-First Policy
Financial institutions are expected to take a cloud-first approach in response to growing regulations, increased granularity, and shortened timelines in addition to internal cost and process pressures.
Organizations that formulated cloud-adoption strategies in 2022 are expected to roll out RegTech solutions on a SaaS model. We also expect more financial institutions to roll out pilot and strategic initiatives in 2023.
Data Collection and Integration with Regulators
Regulators continue to enhance their technology stacks; seamless data transmission between financial institutions to the regulators continues to evolve, forming the basis of data-driven regulations and replacing form-based reporting in the next few years.