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Enhanced efficiency and effectiveness of day-to-day monitoring of regulated firms
saw this risk-based approach
to supervision deepen, as evidenced by increasingly differentiated supervisory programmes at each individual institution. While maintaining a bespoke approach to supervision of authorised firms and adhering to the principle of proportionality, supervisory programmes
were executed to ensure that sufficient attention was paid to the identification of new and emerging risks. The division
had an equal priority to, when necessary, escalate supervisory intensity when issues were identified. These efforts have helped the Regulatory Authority to tailor its on-site reviews appropriately and adjust both the frequency and the intensity of its on-site work in accordance with its risk priorities.
During 2015, the Regulatory Authority actively participated in various supervisory colleges hosted by home jurisdictions. Participation in these supervisory colleges has strengthened information-sharing with relevant home supervisors, aided in the development of a shared agenda for addressing risks and vulnerabilities, provided a sound platform for communicating key supervisory messages, and now forms a
vital component of bespoke supervisory programmes.
A variety of formal training initiatives at an international level were attended by a number of staff, with the learning culture supported by department-
wide usage of FSI Connect
– a supervisory e-learning tool
of the Bank for International Settlements’ (BIS) Financial Stability Institute to which the Regulatory Authority subscribes.
Supervision
Banking and Investment Management
In keeping with a commitment to develop and implement a financial regulatory infrastructure that meets international standards and best practices, Supervision made good progress over the financial year and continued to deliver against
the objectives and priorities
set out in its Strategic Plan. The achievement of their goals was supported by specific strategies and work plans that were fully aligned with statutory objectives.
The global regulatory framework has undergone significant changes in recent years,
which has resulted in material amendments to the international standards established by the international financial standard setters: the Basel Committee
on Banking Supervision (BCBS), the International Association of Insurance Supervisors (IAIS) and the International Organization of Securities Commissions (IOSCO).
The reforms, aimed at strengthening, among
other things, standards for capital adequacy, liquidity management and governance, have necessitated that the Regulatory Authority further hone its risk-based approach to regulating financial institutions, and place increased emphasis on regulatory cooperation and information-sharing.
2015 saw the Regulatory Authority embed and develop the use and understanding of the expanded and enhanced management information produced from XBRL data, a database that has been in use for over one year. The primary objectives were to achieve a consistent risk-based micro- prudential framework in line with global regulatory best practice, supported by the integration of a macro-prudential view.
At the authorisation stage, the division conducts an evaluation of the expertise and integrity
of the applicant’s proposed board members and senior management, and any potential for conflicts of interest (fit and proper test). This evaluation determines whether the applicant firm’s board (or its governing body in the case of branches) has collective sound knowledge of the material activities the applicant intends to pursue, and the associated risks.
Authorisation places great emphasis on the proposed strategic, business and operating plans of the applicant. An assessment of these plans takes into account the applicant’s proposed framework in respect of corporate governance, risk management and internal controls, including those related to the detection and prevention of money laundering and financial criminal activities as well as the oversight of proposed outsourced functions. In keeping with the Regulatory Authority’s risk-focussed approach, the operational structure is required to reflect the scope and degree of complexity of the applicant’s proposed activities.
During 2015, the Regulatory Authority continued to receive
a steady stream of enquiries
from prospective applicants, particularly from the insurance sector. A list of authorised firms can be found in Table A of
this report as well as on the Regulatory Authority’s public register maintained on its website.
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