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SEC Issues Substituted Compliance Determination for France

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Washington, D.C.–(Newsfile Corp. – July 26, 2021) – The Securities and Exchange Commission today announced the approval of a substituted compliance determination order with respect to security-based swap dealers and major security-based swap participants (SBS Entities) subject to regulation in the French Republic (the French Order). This is the first determination that addresses substituted compliance in connection with the Commission’s capital and margin requirements.

“Friday’s action reflects the latest of the Commission’s continued efforts to stand up Congressional mandates under Title VII of the Dodd-Frank Act and prepare for the registration of security-based swap dealers this fall,” said SEC Chair Gary Gensler. “In issuing the determination order, the Commission was guided by our commitment to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”

The French Order, which was approved Friday, provides that certain French firms that are registered with the Commission as SBS Entities conditionally may satisfy certain requirements under the Securities Exchange Act of 1934 (Exchange Act) by complying with comparable French and European Union (EU) requirements. The Commission and the French Autorité des Marchés Financiers (AMF) and the Autorité de Contrôle Prudentiel et de Résolution (ACPR) have entered into a memorandum of understanding to address supervisory and enforcement cooperation and other matters arising under substituted compliance. The Commission retains the authority to inspect, examine and supervise non-U.S. firms and take enforcement action as appropriate.

This action reflects the Commission’s consideration of the comparability of applicable non-U.S. requirements, and incorporate conditions intended to help promote comparability in practice.

Additional information about substituted compliance application is available at https://www.sec.gov/page/exchange-act-substituted-compliance-and-listed-jurisdiction-applications-security-based-swap.

Fact Sheet

Commission Substituted Compliance Order for France

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The Commission is issuing the substituted compliance determination order addressing the availability of substituted compliance for certain non-U.S. security-based swap dealers and major security-based swap participants, in anticipation of those firms’ registration with the Commission this fall.

In response to an application by AMF and ACPR, the Commission is publishing an Order to conditionally permit certain French firms registered with the Commission as SBS Entities to satisfy certain requirements under the Securities Exchange Act of 1934 by complying with comparable French and EU requirements. The Commission and the AMF and ACPR have entered into a memorandum of understanding to address supervisory and enforcement cooperation and other matters arising under substituted compliance.

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Substituted Compliance Framework

Exchange Act rule 3a71-6 conditionally provides that non-U.S. security-based swap dealers and major security-based swap participants may satisfy certain requirements under Section 15F of the Exchange Act by complying with foreign requirements that the Commission has found to be comparable. The Commission’s comparability assessment must consider the scope and objectives of the foreign requirements and also the effectiveness of the foreign financial supervisory and enforcement frameworks.

Rule 3a71-6 further conditions substituted compliance on the Commission and the foreign financial regulatory authority entering into a supervisory and enforcement memorandum of understanding and/or other arrangement addressing supervisory and enforcement cooperation and other matters related to substituted compliance.

Substituted compliance does not constitute exemptive relief, but instead provides an alternative method by which non-U.S. dealers and major participants may comply with applicable U.S. requirements. The Commission retains the authority to inspect, examine and supervise those firms and take enforcement action as appropriate.

The registration compliance date for security-based swap dealers and major security-based swap participants is Oct. 6, 2021, and market participants will begin counting security-based swap transactions and positions toward the registration thresholds on Aug. 6, 2021. See “Key Dates for Registration of Security-Based Swap Dealers and Major Security-Based Swap Participants,” available at https://www.sec.gov/page/key-dates-registration-security-based-swap-dealers-and-major-security-based-swap-participants.

The Substituted Compliance Order

The French Order provides for conditional substituted compliance in connection with requirements under the Exchange Act regarding:

  • Risk control – requirements related to capital, margin, risk management systems, trade acknowledgment and verification, portfolio reconciliation, portfolio compression and trading relationship documentation.
  • Recordkeeping and reporting – requirements related to record creation, record maintenance, reporting, notices, and securities count.
  • Internal supervision and compliance – requirements related to supervision, conflicts of interest and chief compliance officers, and certain related matters.
  • Counterparty protection – requirements related to fair and balanced communications; disclosure of material risks and characteristics; disclosure of material incentives or conflicts of interest; daily mark disclosure; “know your counterparty;” and suitability.

Consistent with rule 3a71-6, the availability of substituted compliance reflects the comparability of applicable French and EU requirements, taking into account the effectiveness of their financial supervisory and enforcement framework. The Order incorporates certain conditions and other limits to promote the comparability of regulatory outcomes, including:

  • Trading Relationship Documentation – Firms would not receive substituted compliance in connection with certain disclosure-related provisions for transactions with U.S. counterparties, but would receive it for transactions with non-U.S. counterparties.
  • Portfolio Reconciliation and Dispute Reporting – Firms would have to report counterparty valuation disputes directly to the Commission, based on French and EU timing requirements.
  • Capital – Firms would be required to: (1) maintain liquid assets (as defined in the condition) that have an aggregate market value that exceeds the amount of the firm’s total liabilities by at least $100 million before applying the deduction (haircut) specified in the capital condition (i.e., risk-weighted assets divided by 12.5), and by at least $20 million after applying the deduction (haircut); (2) make and preserve for three years a quarterly record demonstrating compliance with the capital condition; (3) notify the Commission in writing within 24 hours if the Covered Entity fails to meet the requirements of the capital condition; and (4) include its most recent statement of financial condition (i.e., balance sheet) filed with its local supervisor, whether audited or unaudited, with its initial written notice to the Commission of its intent to rely on substituted compliance. Firms also would be required to apply substituted compliance with respect to certain record making, record preservation, and notification requirements related to capital.
  • Margin – Firms would be required to collect variation and/or initial margin from a counterparty with respect to transactions in non-cleared security-based swaps, unless the counterparty would qualify for an exception from the collateral collection requirements under the Commission’s margin rule for non-cleared security-based swaps. They also would be required to apply substituted compliance for the certain record making requirements related to margin.
  • Internal Supervision – Firms’ internal supervision frameworks must also promote compliance with certain residual U.S. requirements and the conditions to the orders.
  • Compliance Reports –Firms must provide, in English, the compliance reports they provide to their management bodies pursuant to French and EU law no later than no later than 15 days following the earlier of the submission of the report to their management body; or the time the report is required to be submitted to the management and the report must cover applicable Exchange Act requirements and conditions of the orders. Together the reports cover the entire period that the Covered Entity’s annual compliance report would be required to cover.
  • Suitability – The firm’s counterparty must be treated as a “per se professional client” under French and EU requirements and must not be a “special entity” as defined in Exchange Act section 15F(h)(2)(C) and Exchange Act rule 15Fh-2(d).
  • Daily Mark Disclosure – The firm must be required to reconcile, and in fact reconcile, the portfolio containing the relevant security-based swap on each business day.
  • Recordmaking – Firms would need to: (a) apply substituted compliance to a linked substantive Exchange Act requirement, when a recordmaking requirement is linked to that substantive Exchange Act requirement for which a positive substituted compliance determination is being made (and conversely, apply substituted compliance to a substantive Exchange Act requirement linked to a recordmaking requirement); (b) apply substituted compliance to Exchange Act rule 18a-1 with respect to certain records that are important for the Commission to examine for compliance with Exchange Act rule 18a-1; and (c) preserve the data elements to create certain records required by the Commission’s rule and furnish the record in the format (e.g., blotter or ledger) required by that rule.
  • Record Preservation – Firms would need to: (a) apply substituted compliance to a linked substantive Exchange Act requirement, when a record preservation requirement is linked to that substantive Exchange Act requirement for which a positive substituted compliance determination is being made (and conversely, apply substituted compliance to a substantive Exchange Act requirement linked to a record preservation requirement); and (b) apply substituted compliance to Exchange Act rule 18a-1 with respect to certain records that are important for the Commission to examine for compliance with Exchange Act rule 18a-1.
  • Unaudited Financial and Operational Reporting – Firms would need to: (a) report periodic unaudited financial and operational information in the manner and format specified by Commission order or rule; (b) present the financial information in the filing in accordance with generally accepted accounting principles that the firm uses to prepare general purpose publicly available or available to be issued financial statements in France; and (c) apply substituted compliance to Exchange Act rule 18a-1 if subject to that rule.
  • Annual Audited Reports – Firms would need to: (a) simultaneously transmit to the Commission a copy of audited financial reports filed with French authorities; (b) include with the filing contact information of a person who can provide further information about the reports; (c) file accountant’s reports covering the financial reports if the firm is not required by French law to have its financial reports audited; (d) file compliance or exemption reports addressing statements related to Exchange Act rule 18a-4 for which substituted compliance is not available; (e) file supporting schedules related to Exchange Act rule 18a-4; and (f) apply substituted compliance to Exchange Act rule 18a-1.
  • Notification – Firms would need to: (a) simultaneously transmit to the Commission a copy of any notice required to be sent by comparable French laws; (b) include contact information of a person who can provide further details about the notice; (c) apply substituted compliance to Exchange Act rule 18a-1 (if subject to that rule) with respect to any required notifications related to that rule; and (d) apply substituted compliance with respect to a category of records required to made and kept current under Exchange Act rule 18a-5 with respect to the requirement to provide notification of a failure to make and keep current that category of records, and (e) apply substituted compliance to Exchange Act rule 18a-8(c) for Covered Entities with a prudential regulator.
  • Access to Books and Records – Firms would remain subject to Exchange Act requirements to keep books and records open to inspection by the Commission and to furnish promptly to the Commission legible, true, complete, and current copies of those records of the firm that are required to be preserved.
  • English Translations – Firms would need to promptly provide an English translation of any record, report, or notification upon request.

Next Steps

Security-based swap market participants are urged to be mindful of the October 2021 registration compliance date for security-based swap dealers and major security-based swap participants, and relevant firms should take action to prepare for registration. For further information, firms may contact the Office of Derivatives Policy in the Commission’s Division of Trading and Markets, at 202-551-5870.

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Former MD of SUI Foundation, Greg Siourounis, Joins xMoney Global as Co-Founder and CEO to build MiCA-Regulated Stablecoin Platform

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xMoney Global, the global, inter-bank and cross crypto/fiat integrated payments platform has appointed award-winning economist Dr. Greg Siourounis as Co-Founder and CEO. The company is a Mastercard principal member, with strategic European licenses, such as e-Money and VASP.

As the digital landscape continues to evolve with the coming MiCA regulation, xMoney Global intends to lead Europe into this new transformative EU regulated stablecoin era. Greg Siourounis will lead the integration of xMoney’s advanced blockchain-enabled payments infrastructure with its upcoming stablecoin program. Stablecoins are a key driver of blockchain adoption in today’s market, now surpassing Bitcoin, remittances, and PayPal in annual transaction volume. As such, xMoney’s Global reputation positions it to bridge Web3 innovation with traditional finance, leading Europe into a new transformative EU regulated stablecoin era.

Dr. Greg, who has played a pioneering role in the growth of Sui Foundation as its former Managing Director and who previously founded Everypay, will drive xMoney Global’s next wave of growth. Beyond the standard reference of his academic work in 2024’s Nobel Prize in Economics, Dr. Greg’s career is also decorated with awards such as the 2005 Young Economist Award from The European Economic Association and the 2008 Austin Robinson Prize from The Royal Economic Society. His immediate target will be to focus on partnerships, regulatory alignment and market expansion, as xMoney Global looks to build a comprehensive payments platform that bridges legacy financial systems with the potential of decentralized finance.

Commenting on his appointment, Dr. Greg Siourounis, CEO of xMoney Global, said, “As Europe prepares to embrace MiCA regulation, xMoney Global is positioned to redefine what compliant, secure, and seamless digital payments can be. Our goal is to deliver a solid and trusted ecosystem that combines the strengths of traditional finance with the flexibility of blockchain technology to create a future-ready payment experience.”

Beniamin Mincu, Co-founder of MultiversX, said, “xMoney Global’s mission aligns perfectly with the vision of MultiversX to bring scalable and secure blockchain solutions to mainstream finance. This appointment marks a significant step toward building a more inclusive and resilient financial system.”

The launch of xMoney Global aims to offer a next-gen blockchain-as-a-service module backed by its native stablecoin, with key white-labeled services including acquiring, issuing, onramps/offramps and a sticky loyalty program, all backed by MultiversX’s state-of-the-art sharding technology. Following the surge in crypto markets after Trump’s pro-crypto Presidential win, xMoney will be ideally placed to accelerate real-world adoption as the easiest way for everyone (consumers, retail and e-commerce) to seamlessly access fiat and crypto currencies in an app, card or payment gateway.

The post Former MD of SUI Foundation, Greg Siourounis, Joins xMoney Global as Co-Founder and CEO to build MiCA-Regulated Stablecoin Platform appeared first on News, Events, Advertising Options.

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Fintech Pulse: A Daily Dive into Industry Innovations and Developments

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The financial technology sector continues to evolve at a rapid pace, offering innovations that disrupt traditional paradigms. Today’s briefing underscores fintech’s diverse growth avenues: from substantial venture capital plays and strategic partnerships to groundbreaking implementations in lending. Here’s a closer look at recent developments shaping the landscape.


Synapse’s Comeback and Andreessen Horowitz’s Strategic Bet

Source: Axios
Synapse, a financial infrastructure company previously embattled by controversy, is staging a remarkable comeback, backed by none other than venture capital heavyweight Andreessen Horowitz (a16z). With this new infusion of funds, Synapse aims to consolidate its position as a premier platform for building financial services tools.

This resurgence demonstrates the resilience of the fintech ecosystem, where innovation often prevails over turbulence. Synapse’s renewed vigor also signals that top-tier investors remain bullish on infrastructural solutions pivotal to the future of digital finance. Andreessen Horowitz’s participation not only validates Synapse’s model but also underscores the VC giant’s enduring interest in fintech infrastructure, even amid global economic uncertainties.

Analysis:
This partnership exemplifies the dynamism within fintech, highlighting the interplay of innovation, capital, and resilience. It also raises questions about the broader implications of giving second chances to firms with turbulent histories. While Synapse’s evolution could inspire others, it also places a spotlight on governance and accountability in high-growth sectors.


Israel’s Fintech Scene Gets a Boost with Investment in Finova Capital

Source: Calcalistech
Israeli fintech startup Finova Capital has raised an impressive $20 million in a funding round led by prominent institutional investors. This marks a significant milestone for the company as it seeks to expand its suite of financial solutions aimed at underserved markets.

Israel’s fintech ecosystem has long been recognized as a hub of innovation, and this latest investment only reinforces its global standing. Finova Capital’s focus on empowering smaller businesses and fostering financial inclusivity aligns with emerging trends where tech-driven solutions bridge critical gaps in financial services.

Analysis:
With this funding, Finova is poised to enhance its technological offerings while contributing to economic inclusion. However, the broader fintech industry will watch closely to see how the company leverages this capital amid increasing competition from regional and global players.


India’s Yubi Plans a Fundraising Push

Source: Bloomberg
Yubi, a prominent Indian fintech platform backed by Insight Partners, is reportedly preparing for a new fundraising round. Having already established itself as a leader in credit infrastructure, Yubi aims to bolster its offerings and expand its market footprint.

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India’s fintech landscape is witnessing explosive growth, with platforms like Yubi playing a critical role in the credit ecosystem. Yubi’s planned fundraising reflects the broader appetite for scaling solutions that streamline credit access, particularly in emerging markets where traditional lending models often fall short.

Analysis:
This development highlights two key trends: the increasing reliance on credit platforms in high-growth economies and the strategic role of international investors like Insight Partners in driving fintech innovation. Yubi’s expansion plans could set a precedent for other regional fintech players seeking to scale amid global economic headwinds.


Provenir and Hastings Financial Services Win Global Recognition

Source: Business Wire
In a testament to the transformative power of digital lending solutions, Provenir and Hastings Financial Services have been jointly recognized for the Best Digital Lending Implementation at the IBSi Global Fintech Innovation Awards. This accolade underscores the success of their collaboration in modernizing the lending process through cutting-edge technology.

Provenir’s advanced decision-making platform and Hastings Financial Services’ lending expertise have delivered a solution that significantly enhances user experience, operational efficiency, and risk management. Such innovations highlight the increasing role of partnerships in advancing fintech’s digital transformation.

Analysis:
This recognition not only validates the efficacy of digital lending but also emphasizes the importance of partnerships in driving innovation. It signals to the industry that collaboration can be a powerful tool for staying ahead in a rapidly evolving marketplace.


Microf and Quantum Financial Technologies Forge New Alliances

Source: PR Newswire
Microf, a financial solutions provider, has announced a strategic partnership with Quantum Financial Technologies. This collaboration aims to expand lending solutions for contractors, providing streamlined access to capital for businesses in need of flexible financing options.

This partnership is a timely response to the growing demand for specialized financial products in niche markets. By leveraging Quantum’s technology, Microf can now offer more tailored solutions, particularly to contractors navigating complex financial requirements.

Analysis:
This development reflects a growing trend: the diversification of fintech offerings to serve specific market segments. As competition in mainstream fintech intensifies, targeting underserved niches could become a defining strategy for success.


Key Takeaways for the Fintech Ecosystem

  1. Resilience in Fintech Funding: Despite economic uncertainties, venture capital continues to fuel innovative fintech players like Synapse and Finova Capital.
  2. Regional Growth Stories: From Israel to India, fintech ecosystems are thriving, attracting global attention and investment.
  3. Collaboration as a Catalyst: The success of partnerships like Provenir-Hastings and Microf-Quantum underscores the importance of strategic alliances.
  4. The Power of Recognition: Awards like the IBSi Fintech Innovation Awards validate industry achievements, inspiring others to push the envelope.
  5. Focus on Inclusion: Whether through credit platforms or lending solutions, fintech is playing a pivotal role in fostering financial inclusivity worldwide.

Looking Ahead: Challenges and Opportunities

The fintech sector’s journey is far from linear. Regulatory complexities, technological disruptions, and market volatility remain persistent challenges. However, as seen in today’s developments, the opportunities far outweigh the risks. By prioritizing innovation, collaboration, and inclusivity, fintech players can navigate the complexities of the global financial landscape.

This moment in fintech history is pivotal. It’s a time for bold decisions, strategic partnerships, and a commitment to bridging financial divides. As industry players rise to the occasion, the road ahead promises a future where technology and finance intertwine to empower individuals and businesses alike.

 

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Fintech Latvia Association Releases Fintech Pulse 2024: A Guide to Latvia’s Growing Fintech Hub

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The Fintech Latvia Association has launched the latest edition of its annual publication, Fintech Pulse 2024, unveiling insights and resources that position Latvia as a thriving hub for European fintech.

Announced at this year’s Fintech Forum, the magazine is now available in digital format, offering a comprehensive guide for fintech professionals and entrepreneurs navigating the Latvian market and exploring its advantages.

This issue covers essential topics, from support tools provided by Latvijas Banka and newcomer roadmaps to Riga’s investor resources and fintech education opportunities. Readers will find the latest fintech news from Latvia, coverage of this year’s key industry events, and member insights on the future of fintech. The Fintech Landscape section provides a comprehensive overview of the Latvian fintech ecosystem.

Tina Lūse, Managing Director of Fintech Latvia Association, expressed excitement about the ecosystem’s growth: “We are excited to unveil the third annual edition of Fintech Pulse. This year has been pivotal for our ecosystem, and together with public sector stakeholders, we are enhancing financial inclusion, democratizing investments, and driving innovation throughout the sector. This is a testament to Latvia’s emergence as a fintech hub, establishing itself as an equal partner in innovation and support within the Baltic region.”

Minister of Finance Arvils Ašeradens highlighted Latvia’s fintech potential in the magazine, stating: “Latvia has already made strides in adapting its regulatory framework to support a stable financial system. Now, we encourage financial market players to invest in modern technologies to meet the growing demand for inclusive financial services and solidify Latvia’s position in the fintech landscape. We are confident that with the combined offer of the government, Latvijas Banka and Riga city, we are a great place to start your next scalable European FinTech!”

Minister of Economics Viktors Valainis expressed Latvia’s ambition in the magazine, stating: “Latvia wants to become a WEB 3.0. innovation hub and solidify itself as one of the leaders of a newly regulated EU crypto-asset market. We welcome international companies to choose Latvia, a flexible and fast-paced country, where you can obtain a MICA license in just 3 months. Open your office in Latvia, receive a MICA license and serve the whole EU market!”

The Fintech Latvia Association brings together fintech and non-banking financial service providers to represent their interests at both the national and international levels. It promotes sustainable development in Latvia’s financial sector by fostering reliable, responsible, and long-term industry practices that earn trust from consumers and regulatory authorities. The association is committed to supporting innovation and growth opportunities within the fintech landscape.

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