The UK and Singapore announced the launch of a new Financial Partnership at the sixth UK-Singapore Financial Dialogue that was held virtually today. The Dialogue was chaired by Director General (Financial Services) of HM Treasury (HMT), Ms Katharine Braddick, and Deputy Managing Director (Markets and Development) of the Monetary Authority of Singapore (MAS), Mr Leong Sing Chiong.
The Financial Partnership is supported by a new Memorandum of Understanding (MoU) which was signed by the Chancellor of the Exchequer, Mr Rishi Sunak together with Senior Minister and Chairman of the MAS, Mr Tharman Shanmugaratnam. It demonstrates the joint commitment by the UK and Singapore to build a more comprehensive and enhanced relationship in financial services and strengthen regulatory cooperation between the two countries.
Under the Partnership, the UK and Singapore will explore opportunities for greater financial cooperation, including enhanced information sharing, closer cooperation in international fora, as well as regulatory deference, to drive new and broader opportunities for financial services trade and cooperation.
The two countries also announced an MoU to enhance bilateral cyber security cooperation, including the sharing of cyber-related information and supervisory best practices. The MoU was signed by UK Economic Secretary to the Treasury, Mr John Glen; Chief Executive of the Financial Conduct Authority (FCA), Mr Nikhil Rathi; Deputy Governor of the Bank of England (BoE) and Chief Executive of the Prudential Regulation Authority (PRA), Mr Sam Woods; and Managing Director of the MAS, Mr Ravi Menon.
The Financial Dialogue discussed and agreed on the following areas of joint interest:
a. Regulatory cooperation: Both countries reaffirmed their commitment to effective regulatory and supervisory cooperation and to maintaining safe and open markets enabling participants to trade and manage risks more efficiently between their markets. The UK and Singapore discussed possible areas for enhanced collaboration, particularly in cross-border financial regulation. The UK will update Singapore on its new regime for marketing of overseas funds and its review of the Solvency II regime for insurance firms. The participants also discussed developments related to the global asset management industry, including the global norm of portfolio delegation, and agreed to maintain a dialogue on these developments.
b. Green finance and carbon markets: Accelerating green finance and encouraging the development of carbon markets remain a high priority for both the UK and Singapore.
Both countries reaffirmed the importance of interoperability of taxonomies to facilitate cross-border sustainable financial flows and will work towards identifying compatibilities in the UK and Singapore taxonomy principles and metrics for green and transitional activities. The UK and Singapore also discussed ongoing efforts to tackle climate change, where they welcomed commitments from financial institutions across the world, including via the Glasgow Financial Alliance for Net Zero (GFANZ).
Participants reaffirmed support for mandatory climate-related financial disclosures aligned with the Task Force for the Climate-related Financial Disclosures (TCFD) recommendations. Both countries also welcomed the International Financial Reporting Standards (IFRS) Foundation’s work to establish an International Sustainability Standards Board (ISSB) by the 26th United Nations Climate Change Conference (COP26) to develop baseline global sustainability reporting standards, building on TCFD recommendations and leveraging other existing reporting frameworks. Regulatory authorities in the UK and Singapore committed to continue working together through international fora such as the International Organization of Securities Commissions (IOSCO) and the Financial Stability Board (FSB) to advance this agenda.
Both countries will explore collaborating on a biodiversity pilot study, which will inform research into how nature-related risks will affect the financial system and contribute to this area of growing importance.
The UK and Singapore recognised the need to conclude a credible and balanced Article 6 [1] package of the Paris Agreement at the COP26, to support the development of carbon markets. Both countries also had a constructive exchange on the role of voluntary carbon markets in supporting the Paris Agreement, including the importance of driving the high-integrity use of voluntary carbon credits. The UK and Singapore will encourage the private sector to explore ways to develop a transparent and robust voluntary carbon market for high quality voluntary carbon credits, such as deepening trading linkages and data sharing between Singapore and London to enhance inter-operability and cross-regional capital flows.
c. FinTech and stablecoins: The UK and Singapore had a productive discussion on recent technological developments and their respective regulatory approaches, including with respect to new payment methods and digital financial services, and agreed to continue sharing information. Both countries also discussed global developments and the evolving regulatory regime for stablecoins, and agreed to exchange regular updates on their respective regulatory approaches. The BoE presented highlights from its recently published discussion paper on new forms of digital money. Singapore outlined how its review on e-wallet payment limits has progressed and agreed to update the UK on the review. Both countries will continue to work together through the Global Financial Innovation Network (GFIN), and explore collaboration opportunities through their respective Bank for International Settlements (BIS) Innovation Hubs that are hosted in Singapore and London.
MAS Chairman Tharman Shanmugaratnam said, “The enhanced financial partnership between the UK and Singapore is important and timely. With UK hosting COP26 in November, and Singapore pushing ahead with its Green Finance Action Plan to support Asia’s transition to a low carbon economy, our collaboration will add momentum to sustainable finance, climate-related financial disclosure, and the development of carbon markets. These are areas where it is critical and urgent to forge international alignment. The strengthening of regulatory cooperation between our two countries also comes at a time when financial services are undergoing accelerated transformation through technology, and will provide a framework for the growth of new activities in both our markets.”
The Chancellor of the Exchequer, Rishi Sunak said, “Our financial services industry helps to grow the economy and create jobs, and today’s agreement is a landmark step in showing the UK – as one of the world’s preeminent financial centres – is both open to the world and committed to maintaining the highest standards of regulation. Our financial partnership will help increase investment and trade with Singapore and the Asia-Pacific region and boost collaboration on important areas such as FinTech and green finance.”
The Dialogue was attended by senior officials from HMT, BoE, FCA, the Department for Business Energy and Industrial Strategy (BEIS), the Department for International Trade (DIT) and the British High Commission in Singapore from the UK side; and senior officials from MAS, the National Climate Change Secretariat (NCCS) under the Prime Minister’s Office (PMO), the Ministry of Trade and Industry (MTI) and the Singapore High Commission in London from the Singapore side.
An industry-led UK-Singapore business roundtable will convene on 1st July to discuss approaches and potential cross-border collaboration in supporting the transition towards low-carbon and scaling voluntary carbon markets.
The next Financial Dialogue is expected to take place in 2022.
[1] Article 6 of the Paris Agreement recognises that Parties to the Paris Agreement may voluntarily choose to pursue market and non-market based cooperation in the implementation of their nationally determined contributions to allow for higher ambition in their mitigation and adaptation actions, and to promote sustainable development and environmental integrity. Parties to the Paris Agreement are currently negotiating a set of decisions to operationalise the provisions of Article 6.
