Addressing growing calls in South Korea to ease firewall and outsourcing regulations, senior officials from global financial institutions on Wednesday highlighted the need to allow firms more choice in setting the scope of their data protection.
Growth prospects of the financial sector have apparently been curbed by “stricter-than-necessary” legal barriers that restrict the transfer of information between certain financial parties and outsourcing regulations set by the financial authorities, the officials and lawyers noted at the “Reform of Firewall and Outsourcing Regulations” seminar hosted by law firm Kim & Chang.
Matthew van Weezel, Citigroup Global Markets Japan‘s chief compliance officer speaks at the “Reform of Firewall and Outsourcing Regulations” seminar hosted by law firm Kim & Chang at the Korean Federation of Banks headquarters on Wednesday. (Kim & Chang)
Regarding the issue of firewalls, ING Bank NV’s Legal Financial Markets Asia-Pacific chief Chiew Fai Chan stressed the importance of firms taking responsibility and developing an internal system or standards on inter and intra-company information sharing.
According to Chan, the EU and Singapore place emphasis on establishing procedures to identify and manage conflicts of interest, while controlling the flow of information to prevent conflict of interest.
Based on the principle, ING NV Singapore categorizes the information they hold into four types, based on risk-management, from information they deem “public” enough to share freely to “highly sensitive or confidential,” Chan said.
“The risk of any breach of firewalls is addressed and managed via our enterprise risk management framework, which is a risk-based approach to addressing all risks that ING as a financial institution faces,” he added.
The Singapore-based official suggested South Korea further clarify or simplify firewall regulations in line with the global trend and cooperate with other Organization for Economic Cooperation and Development regulatory bodies in reinterpreting relevant regulations.
(Kim & Chang)
Another official pointed out the need for similar changes in the nation’s firewall and outsourcing regulations, citing the case of Japan.
According to Matthew van Weezel, Citigroup Global Markets Japan’s chief compliance officer, Japan eased firewall regulations in 2009, in a bid to foster the financial industry’s self-regulation, a move believed to have further fueled competition among firms.
He said that Japanese firms are not required to report to Tokyo’s financial authorities on their outsourcing processes, except for business classified as “sensitive” by the companies.
“Banks and securities firms in Japan are responsible for their entire businesses and operations to their customers and supervisors even when some of them are outsourced,” van Weezel said.
“They are also required to have company-wide chief officers for management of outsourcing.”
Wednesday’s seminar comes as the policymaking Financial Services Commission vowed to ease rules on firewalls, also known as the “Chinese wall,” for the financial sector. These were originally set up to prevent conflicts of interest among relevant parties when exchanging information.
By Jung Min-kyung (firstname.lastname@example.org