The financial sector faces unprecedented challenges as the most far-reaching set of reforms in the history of the industry are implemented.
Our expertise in international financial regulation means that we are able to work with clients to help them adapt their businesses to the new demands they face.
The payments industry is undergoing significant changes, driven by technological innovation, new regulations and the broader macro-economic environment. We identify some key trends that are emerging.
Digital and card payments are on the rise as use of cash declines. Recent years have also seen a proliferation of fintechs offering innovative payment services and solutions. At the same time, there has been a focus on the role of competition in payment services, with Open Banking initiatives requiring payment account providers to provide account and data access to new market players. Whilst the initial focus has been on retail payments, opportunities for similar innovation in other segments of the payments market, such as with SME and wholesale clients are rapidly emerging. Read more about Payments Industry Trends in a Hyperconnected World.
A vision for the future of the UK financial system: the van Steenis report – how financial services might evolve in response to technological, social and environmental change
The Bank of England published a report in June 2019 on the future of the UK financial system and what that means for the Bank. The report, authored by Huw van Steenis, examines how financial services might evolve over the medium term in response to technological, social and environmental changes and how the Bank should respond. It sets out an ambitious vision for the future of the UK financial system and the role of the Bank as a leader of global regulatory standards supporting a global economy.
The van Steenis report identifies wide-ranging drivers of change that are shaping the UK economy, from big data and cyber-crime to climate change and an ageing population. It considers the role of finance in this changing environment and how a responsible and resilient finance industry can serve and support these changes. Finally, the report sets out recommendations for the Bank of England, identifying areas where it could take action to enable innovation, empower competition and build resilience in the financial system. Read more about the van Steenis report.
Since the financial crisis of 2008, there has been a major shift away from internationally agreed standards and principles, as regulators and policy makers have focused on national legislative and regulatory solutions to crisis management. This has coincided with the rise of populist and nationalist political movements across a growing number of countries, further eroding international solutions. However, despite this move towards deglobalisation, the growth of the global digital economy will require international cooperation.
In this report, Clifford Chance experts discuss competing forces towards and against globalisation, focusing on five areas that are driving or challenging global approaches in financial regulation, including national approaches to crisis management and the implementation of global regulatory standards, changing approaches to market access, China’s search for global capital and emerging approaches to the regulation of FinTech and cryptoassets. Read more about Globalisation and Financial Regulations.
In the immediate aftermath of the 2008 financial crisis, it was decided that the response needed to be global and that the concept of “too big to fail” no longer applied. However, in reality, policy makers have often taken national and protectionist approaches to crisis management, focusing on financial stability and the impact on taxpayers, rather than the broader global economy. Clifford Chance experts explore the reasons why. Read more about National versus global approaches to financial crisis management.
The 2008 global financial crisis introduced an avalanche of regulatory reforms to counter the perceived failures of the global financial system. While regulators have been ready (and eager) to collaborate on principles and standards, they have not always implemented them in the same way, creating friction in cross-border transactions and contributing to market fragmentation. Here Clifford Chance experts assess the issues. Read more about Financial crisis reforms.
With protectionism and deglobalisation on the rise in Europe, the US and elsewhere, China, by contrast, is championing globalisation. Its financial system is still relatively closed to international access, but the Chinese government has recently taken steps to open up access to its financial markets to foreign investors, in order to seek global capital. Although it remains at a relatively early stage, legislative changes such as the new Foreign Investment Law and links to the global financial system including Shanghai-Hong Kong Stock Connect are already having an impact and China’s influence in global financial markets may grow significantly if this trend continues. Read more about China's search for global capital.
Technological innovation, the rise of fintech firms and the entry of big tech companies, such as Facebook and Amazon into financial services, are all driving the shift towards a digital economy.
As new financial products and services emerge, policy makers and regulators have to keep up with the pace of change and address new risks. At an international level, whilst they recognise the need for a coordinated response to these developments, so far, this has been largely limited to addressing money laundering and terrorist financing risks. Read more about Fintech's international trends and regulatory responses.
The transition from LIBOR and other IBORs to alternative risk free rates could be the most significant change to financial markets in recent years. Our series of briefings focus on various aspects of this transition. LIBOR – loan market update looks at the new LMA exposure draft documentation and other issues relating to transition. Rate expectations: transitioning away from LIBOR explores what a move to risk-free rates will mean in practice for corporate treasurers. OIS and RFR Futures Conventions: Lessons for LIBOR replacement term rates considers how conventions used in Overnight Index Swaps (OIS) and RFR futures markets are relevant to the development of RFR-based term rates. Further resources and information are available on our topic guides on Regulation of benchmarks and IBOR transition and new risk-free rates.
This report provides a high level overview of ongoing and expected EU initiatives on financial services. Read more about the EU financial services horizon scanner. The horizon scanner is also available as a Topic Guide on the Financial Markets Toolkit.
As the PRA and FCA launch their consultations on rule changes to reflect CRD V, pay and remuneration regulation continue to be areas of focus for financial services firms.
Given the impact of Covid-19, the wider economic climate, the end of the Brexit transition period bringing further regulatory change andinvestor, regulator and public scrutiny of pay being at an all-time high, pay and governance-related questions need particularly careful thought and planning now. Read more about financial services remuneration.