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Cyberattacks prompt Australia to tighten regulations and risk management standards – Industry roundup: 7 November

The COP27 summit kicks off with a consensus to review climate compensation 

COP27, the largest international UN climate summit of the year, officially commences this week (6-18 November) in Sharm el-Sheikh, Egypt, where representatives from approximately 200 nations will convene to discuss topics such as compensating underdeveloped nations due to the distress caused by global warming.  

As weather disasters continue to mount, such as this year's floods in Pakistan, which reportedly caused economic losses of more than US $30 billion and displaced hundreds of thousands of the population, the added pressure to address the problem has also been growing rapidly.  

Global emissions are reportedly on track to increase 10.6% by 2030 compared to 2010, according to a UN report released last week. Scientists report that emissions must drop by 43% by that time to keep global warming to 1.5 degrees Celsius above pre-industrial levels, as set by the 2015 Paris Agreement. Additionally, a promise made by wealthy nations to provide US $100 billion annually since 2020 to assist developing nations in reducing their CO2 emissions and coping with climate change is also falling short, said reports. One example is reportedly the construction of infrastructure to safeguard drinking water supplies from rising sea levels. Furthermore, several countries, including the US and European Union members, are asking for increased supplies of fossil fuels to effectively reduce consumer energy prices, delaying a global shift toward greener energy.  

Despite efforts to resolve loss and damage caused by climate change-related disasters, COP27 is also facing funding challenges, with western governments' budgets diminished from massive spending to protect their citizens from the economic effects of the Ukraine war. 

Reports show that only two small countries have offered compensation for loss and damage to date. Denmark has reportedly pledged 100 million Danish crowns, while Scotland has pledged £2 million. According to research, climate-related losses could reach $580 billion per year by 2030. 

Small island states are expected to push a proposal for UN-hosted "response fund" to pool and distribute cash to disaster-affected countries this week. The "V20" group of 58 climate-vulnerable nations and the Group of Seven wealthy countries plan to launch a "Global Shield" to strengthen insurance and disaster-response financing.  

Recent cyberattacks prompt Australia to tighten regulations and risk management standards 

According to Fitch Ratings, the frequency of recent cyberattacks against Australian organizations is pressuring lawmakers, regulators and supervisors to create minimum cyber standards that will reportedly aid in long-term cyber risk mitigation. If these standards are implemented and coordinated nationally, Australia's approach to managing cyber risk can be strengthened, said reports.  

One of the most recent high-profile incidents occurred at Medibank, according to reports, exposing personal and health claims data on the company's 3.9 million customers. This incident emphasized that financial institutions and corporations with large amounts of sensitive client data are at high risk, which prompted the activation of the National Coordination Mechanism, a system that brings together agencies from multiple levels of government as well as private-sector stakeholders to respond to a crisis.  

Reports indicate that the lack of adequate penalties and accountability in Australia has made organizations more appealing targets, emphasizing the need for a more holistic and vigorous approach. It reportedly places Australia in a unique position to spearhead efforts to design and implement a solution. Additionally, the federal government is enforcing stricter privacy laws, significantly raising the penalties, and granting the Information Commissioner more authority to deal with privacy violations. The proposed Privacy Legislation Amendment (Enforcement and Other Measures) Bill 2022 aims to legislate a significant increase in privacy penalties if passed.  

Furthermore, the Australian Prudential Regulation Authority (APRA) is conducting public consultations on a new prudential standard intended to improve operational risk management in the banking, insurance and superannuation sectors. Simultaneously, various international organizations have reportedly begun to improve coordination and promote interconnectivity in the establishment of minimum cyber hygiene standards. Following the Medibank leak, APRA urged companies that use online application and policy transaction processes to fortify verification control mechanisms and increase monitoring on potentially fraudulent avenues, such as the use of credit card data.  

Binance intends to sell its entire FTX token holdings, causing Bitcoin and Ethereum prices to drop

Binance, the world's largest cryptocurrency exchange, is reportedly liquidating all of its remaining holdings of tokens from the competitor FTX trading platform, which is owned by Sam Bankman-Fried, stated Changpeng Zhao, Founder and CEO, Binance. 

Reports indicate that Bitcoin fell 2.7% to $20,727, while Ethereum fell 1.8% to $1,579, in contrast to Monday's rising US equity futures. The FTX Token USD reported a decrease of 1.6% at $22.45, compared to the coin closing at $25.87 last week. Zhao stated that Binance aims to withdraw with minimal negative market impact on FTX. Due to the current state of the market and the lack of available liquidity, Zhao anticipates that the transition will take several months to complete. 

Zhao stated that Binance sold equity in FTX last year and received $2.1 billion in Binance USD and FTT coins. According to reports, the number of tokens being redeployed is 23 million, with a valuation of more than $500 million. Caroline Ellison, CEO, FTX, stated that Alameda Research, the trading division of FTX, had reportedly initiated a bid to purchase the tokens at $22. 

As a result of changes made to a recent bill that would have given the Financial Conduct Authority and the Treasury regulatory authority, the UK is now poised to impose stricter regulations on the marketing of cryptocurrencies. Due to a significant rise in cryptocurrency fraud, the UK division of Santander Bank has decided to impose limits on customer payments to cryptocurrency exchanges. Furthermore, Goldman Sachs intends to launch a new classification system for digital assets in collaboration with index maker MSCI and Coin Metrics, a crypto financial intelligence firm.

HSBC unveils the “HSBC Orion” tokenisation platform

HSBC has publicized a significant investment in blockchain-based technology less than two months after its CEO reportedly stated that the bank had no plans to enter the cryptocurrency market. The new, exclusive tokenization platform from the British bank is dubbed HSBC Orion. Businesses and financial institutions can expect to issue digital bonds based on distributed ledger technology. The European Investment Bank (EIB) is reportedly investigating the possibility of releasing the first GBP tokenized bond on the market using HSBC Orion. 

The platform uses blockchain technology as a single source of information, with asset and settlement tokens residing natively and securely on the platform's ledger and transactions taking place through the exchange of these tokens, said reports. John O'Neill, Global Head of Digital Asset Strategy, Markets & Securities Services, HSBC, commented that digital assets are a rapidly growing component within the financial markets, with clients expecting tokenisation benefits in a secure and reliable environment. The bank intends to use HSBC Orion to enable additional digital bond issuance and to broaden its application to numerous different product offerings in 2023. Tokenisation creates new opportunities for fixed-income issuance, such as faster processing and better operational performance, stated 

Asif Sherani, managing director, Head of DCM Syndicate, EMEA. 

Santander places restrictions on payments to cryptocurrency exchanges 

Due to rising fraud, Santander UK is reportedly imposing a £3000 monthly limit on payments to cryptocurrency exchanges. As stated by reports, customers will be unable to purchase more than £1000 of cryptocurrency per transaction, with a total limit of £3000 in any rolling 30-day period, beginning on 15 November.  

The move, according to Santander, is aimed at safeguarding customers, as cryptocurrency fraud has increased significantly. Santander, in conjunction with the Financial Conduct Authority, warns about the risks of investing in cryptocurrency, citing the fact that money held in wallets is unlikely to be protected under the Financial Services Compensation Scheme. In the interim, Santander has stated that it will withhold payments to Binance as a result of recent FCA warnings. 

Virgin Money joins forces with the UK government to aid small companies

Virgin Money is reportedly becoming the newest financial institution to join the General Export Facility (GEF), making financial support available to their business clients, according to Samir Parkash, interim CEO, UK Export Finance (UKEF).  

The GEF offers essential support from the government to small companies throughout Britain, according to Samir Parkash. Since its inception in 2021, it has reportedly enabled nearly £250 million in working capital loans and supported the liquidity needs of hundreds of small businesses.  

The first collaboration between Virgin Money and UKEF under the GEF aims to provide assistance to the Oxfordshire-based company Westminster Group. The financial support has empowered the company to secure new export contracts for the supply of X-Ray security equipment to two international airports in Southern Africa.  

Businesses must reportedly meet certain requirements to be eligible for assistance, including demonstrating that at least 20% of annual turnover was made up of UK export sales during any of the past three fiscal years, or that at least 5% of annual turnover was made up of UK export sales in each of the last three fiscal years. 

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