Clifford Chance

Welcome to this week's global fintech round-up, summarising fintech regulatory developments that have happened around the world along with our Clifford Chance fintech publications and upcoming events.

Details of these and previous developments can also be found on our Fintech Topic Guide on the Clifford Chance Financial Markets Toolkit.

SPOTLIGHT

How to attack (and defend) an AI system: a primer on security

AI presents both opportunities and risks. Amongst the most serious risks are adversarial manipulations of AI systems, where such systems are subject to deliberate attempts to attack or sabotage them.

In January 2024, the US National Institute of Standards and Technology (NIST) published a report aimed at establishing a framework for analysing adversarial machine learning, with the ultimate goal of helping defend against threats. The 107-page report was not just a technical manual, but also a reminder that AI technologies are subject to unique security and privacy risks. The European Union's AI Act also addresses security risks, providing that high-risk AI systems must be "resilient as regards to attempts by unauthorised third parties to alter their use, outputs or performance by exploiting the system vulnerabilities".

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

• (9 Apr 2024) Bank for International Settlements (BIS) Financial Stability Institute Insights paper on the evolving regulatory landscape for issuers of single fiat-pegged stablecoins, which compares regulatory frameworks issued by 11 authorities in seven jurisdictions to identify emerging trends and commonalities in their respective frameworks. | Webpage
• (3 Apr 2024) The BIS, Bank of France (representing the Eurosystem), Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England and the Federal Reserve Bank of New York have announced the launch of Project Agorá, which is intended to explore how tokenisation can enhance the functioning of the monetary system. The project builds on the unified ledger concept proposed by the BIS and will investigate how tokenised commercial bank deposits can be seamlessly integrated with tokenised wholesale central bank money in a public-private programmable core financial platform. | Press release

Europe

EU:  

• (8 Apr 2024) LCH SA has announced that it has received the required regulatory approval from the French national competent authorities and EU supervisory authorities to clear cash-settled Bitcoin index futures and options contracts. LCH SA will provide clearing services through its new dedicated service, LCH DigitalAssetClear, for these contracts traded on the UK Financial Conduct Authority (FCA) regulated digital asset derivatives trading venue, GFO-X. | Press release
• (4 Apr 2024) The Governing Council of the European Central Bank (ECB) has approved the participation of ten market participants and six market distributed ledger technology (DLT) operators in exploratory work on new technologies for the settlement of wholesale transactions in central bank money, starting on 13 May 2024. The call for expression of interest to join a second wave of trials and experiments between July and November 2024 is open until 30 April 2024.
• (3 Apr 2024) European Securities and Markets Authority (ESMA) letter to the EU Commission, Parliament and Council, providing an interim update on the DLT pilot regime | Press release

UK:  

• (10 Apr 2024) The City of London Corporation, in partnership with Innovate Finance, has released a new report calling for the Prudential Regulation Authority (PRA) and FCA to introduce a ‘RegTech Test’ to help assess how technology can best enable regulatory compliance, and discussing a wider range of regulatory initiatives when considering the policy impact on compliance technologies, also highlighting the benefits of implementing the ‘RegTech Test’. | Press release

EVENTS

• Global Financial Markets Perspectives Series: Navigating cybersecurity and resilience in 2024 (online, 18 April 2024): The global trend towards increased cybersecurity and resilience regulation will tighten existing requirements and affect a broader range of businesses than ever before. From updates in SEC and NYDFS cyber requirements, to Singapore’s proposed Cybersecurity Amendment Bill, our global panel will examine developments in the US, APAC, Europe and the Middle East. | To register, please see the event series registration form
• Global Financial Markets Perspectives Series: AI Series: Regulating AI – examining global developments (online, 30 April 2024): This session will look at the global development of regulatory frameworks for AI, including emerging trends and diverging approaches being taken in different jurisdictions. This will include the EU’s AI Act, US developments at federal and state level, the UK perspective and the measures being taken in China to tackle regulation of generative AI and deepfakes. | To register, please see the event series registration form
• Global Financial Markets Perspectives Series: AI Series: Regulation of artificial intelligence in the UK and EU insurance sectors (hybrid, 16 May 2024): Our panel will take a closer look at developments in the regulation of AI systems in the UK and EU that are directed specifically at the insurance sector. This includes comparing the EU AI Act with the latest information on the PRA and FCA’s approach to AI regulation that will affect the insurance sector value chain. We will consider how the insurance sector in the UK and EU could prepare for these new regulations, with a focus on the potential implications for governance arrangements and systems and controls. | To register, please see the event series registration form
• Global Financial Markets Perspectives Series: AI Series: Contracting for AI (online, 13 June 2024): What makes procuring AI different from procurement of other software or services? How does this affect your contract terms and supplier onboarding and management processes? When there is limited scope for negotiation, where should you focus your efforts? In this session we will discuss strategy and practical tips for contracting for AI. | To register, please see the event series registration form