Fund Product, Company and Regulatory Updates as at 14 August 2018

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Product Updates

CBA developing blockchain bond
The Commonwealth Bank (CBA) is creating a world-first bond that will be created, allocated, transferred and managed using only blockchain technology. The World Bank provided CBA with a mandate to develop the Kangaroo Bond, with the help of Northern Trust, QBE, and Treasury Corporation of Victoria. 

The bond will be issued and distributed on a blockchain platform run by the World Bank and CBA in the USA and Australia respectively. Blockchain technology has the potential to completely renovate current banking systems. 

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Regulatory Updates

ASIC consulting on Global Financial Innovation Network
ASIC is collaborating with 11 international financial regulators and other organisations to look at the creation of the Global Financial Innovation Network (GFIN). The network is to offer efficiencies for companies to interact with regulators, work between countries, and scale innovative ideas.

A framework of cooperation will also be on the cards, which already exists between many judiciaries. A consultation paper has been released, with views being sought on the mission statement, proposed functions, and where priorities should lie. Organisations and regulators that are interested in participating should get in touch with ASIC. 

The organisations currently involved in the GFIN include: 

1. Abu Dhabi Global Markets
2. Autorité des marchés financiers (Québec)
3. Central Bank of Bahrain
4. United States Consumer Financial Protection Bureau
5. Dubai Financial Services Authority
6. Financial Conduct Authority (UK)
7. Guernsey Financial Services Commission
8. Hong Kong Monetary Authority
9. Monetary Authority of Singapore
10. Ontario Securities Commission
11. Consultative Group to Assist the Poor (CGAP)

Download the Consultation Paper (PDF 739 KB)

Banks upgrading fraud protection after ASIC review
Five Australian banks are to improve fraud protection measure for deposit accounts operated by third parties, like financial planners. Concerns were raised after another ASIC investigation whereby a company collapsed owing almost $60 million to about 400 clients. Fraud was not identified in the investigation, however putting policies, procedures and controls in place to prevent it in future was the key objective to block unauthorised transactions by financial advisers. 

The banks reviewed were: 

• Bendigo and Adelaide Bank Limited
• Commonwealth Bank of Australia
• Macquarie Bank Limited
• National Australia Bank Limited
• Westpac Banking Corporation.

The report found:

• Financial advisers have varying levels of control over their clients' bank accounts by bank
• Banks should provide better explanations of what access a financial adviser has and the risks involved
• Control measure should be updated to protect accounts

Banks are now to: 

• Ensure forms are clear in what power customers are giving to their financial advisers
• Monitor adviser use of these accounts and transaction requests, flagging any suspicious requests
• Look into fraud and consider remediation of lost funds due to unauthorised transactions

ASIC releases women and finance videos
Research conducted by ASIC found that almost half of the women surveyed find money decisions overwhelming and stressful; women retire, on average, with half the super balance of men; and 85 per cent of women under 35 don't understand fundamental investment concepts. 

ASIC wants to inspire women to talk about money so that they can be more confident making financial decisions. The videos, Women talk money, involve discussions of Australian women talking about their personal money stories and habits.