MACAO INTRODUCES NEW FINANCIAL SYSTEM ACT TO BOOST COMPETITIVENESS AND INNOVATION

A New Era for Banking Regulation in Macau

The Macau Legislative Assembly has approved a new Financial System Act that will replace the existing 30-year-old Decree-Law, marking a significant overhaul of banking regulation in the region. The new Act is set to come into effect on November 1, 2023, and aims to revamp the regulatory framework governing banking operations in Macau.

Key Provisions of the New Financial System Act

• Enhanced flexibility for licensing financial institutions: The new Act introduces more flexible requirements for licensing financial institutions, making it easier for new players to enter the market.
• New type of restricted license bank: A new type of restricted license bank is introduced, allowing banks to operate with fewer restrictions and increased flexibility.
• Increased minimum registered capital requirement for banks: The minimum registered capital requirement for banks has been increased, ensuring that banks have sufficient capital to absorb potential losses.
• Registration system for publicly issuing bonds: A registration system for publicly issuing bonds is introduced, making it easier for companies to access capital markets.
• Establishment of “sandboxes” for innovation: The new Act establishes a legal framework for “sandboxes”, allowing financial institutions to test and develop new financial products and systems in a controlled environment.

Enhanced Regulatory Framework

The Monetary Authority of Macau (AMCM) will gain enhanced powers to supervise accountants and obtain urgent information from them. Prudential parameters for risk exposure assessment have also been tightened, including a reduction in the threshold for “large exposure”.

Positive Impact on the Financial Sector

Experts say that the new Financial System Act represents a major development in Macau’s financial sector, aiming to increase competitiveness, promote innovation, enhance efficiency, and adhere to international standards of financial regulation. The new law is expected to have a positive impact on the region’s financial sector, reinforcing its standing as a robust and progressive financial hub in Asia.

What This Means for Financial Institutions

Financial institutions operating in Macau must now familiarize themselves with these changes and consider their impact on operations and business strategies. It is essential for financial institutions to adapt to the new regulatory framework and take advantage of the opportunities presented by the new Financial System Act.

For further information, contact Pedro Cortés at Rato, Ling, Lei & Cortés Advogados by telephone or email.