ASIFMA: 24 - 30 Sep 2013 | Issue 173

24 - 30 Sep 2013 | Issue 173 Spotlight Webinar: Progress & Developments in Establishing the Global LEI System GFMA and our nine global trade association partners will discuss the progress and developments in establishing a global system for legal-entity identifiers. The LEI Regulatory Oversight Committee has set forth key requirements for local operating units to participate in the global LEI system. In addition, other milestones have been reached, including steps toward the establishment of the Global LEI Foundation and calling for applicants for the board of directors. As regulators finalise reporting requirements worldwide requiring use of LEIs and as LOUs comply with rules, financial-market participants will be interested to hear about these important developments. CFTC’s Division of Market Oversight Issues Time-Limited No-Action Relief for Temporarily Registered Swap Execution Facilities from Certain Swap Data Reporting Requirements The CFTC Division of Market Oversight (Division) issued a letter providing temporarily registered swap execution facilities (SEFs) with relief from certain swap data reporting requirements of Parts 43 and 45 of the Commission’s Regulations with respect to certain swaps in the equity, foreign exchange (FX) and other commodity asset classes executed on, or pursuant to, the rules of a SEF, and subject to conditions specified in the letter. Update CHINA Xi to address APEC summit on China's reform Chinese President Xi Jinping will address the 21st economic leaders' meeting of the Asia-Pacific Economic Cooperation (APEC) forum and expound on China's economic situation and reform measures, the Foreign Ministry has announced. (People Daily) China PBOC Says To Encourage More Market-Based Benchmark Rates Hu Xiaolian, a Vice-Governor of the People's Bank of China, said in comments posted online that the bank will promote the issuance and trading in the interbank market of certificates of deposit and gradually expand market-based debt products, to lay the foundations for the eventual liberalisation of deposit rates. (MNI) PBC Issues 2012 China Financial Standardization Report | (Chinese only) According to the Report, in 2012, the PBC will continue to further its standardizing financial strategy, resulting in a systematic standardization of financial regulation with its promotion of industrial development; The issuance of Regulatory Standards in China’s Banking Industry has facilitated the formation of a comprehensive financial standard system covering banking industry, securities industry, futures industry, insurance industry as well as printing industry. With the increasing demand of financial standardization, a series of standards for major financial sectors have been published and implemented to fill in the blanks of relevant sectors, notably the internationally advanced publishing of standards for China mobile financial payment series lays the foundation of regulating mobile payment services. (NAFMII Newsletter) State Council Unveils Overall Scheme of Shanghai Free-Trade Zone | (Chinese only) On 27, September, the China State Council announces the rules of Shanghai Free-Trade Zone, aimed at exploring convertible capital accounts and financial service sector’s full opening to qualified private sector and foreign financial institutions after 2-3 years’ trial. Shanghai Free-Trade Zone will further expand the opening scope of financial service and promote reform of foreign investment management system; the scheme is to expand the opening range of financial services, shipping, merchandizing and trade-related services, professional services, cultural industries as well as social services. Notably, Shanghai Free-Trade Zone is prior to carry out and try convertibility of RMB capital account, interest rate liberalization as well as RMB cross-border use. (NAFMII Newsletter) China reduces intervention and facilitates business The central government announced on Wednesday it will give up more administrative power to let the market better play its role, streamlining procedures for administrative approvals and easing investment controls. Once the efforts materialize, the State Council will have cut 221 administrative powers since Premier Li Keqiang unveiled an administrative reform initiative in March. (China Daily) China Markets Watchdog Embraces Risk After Everbright Fat Finger Policy makers in China, seeking to improve allocation of capital, have since 2008 permitted brokerages including Shanghai-based Everbright to offer clients short selling and margin trading, as well as betting on derivatives with their own funds. While the state-controlled brokerage has now been suspended from most proprietary trading, CSRC Chairman Xiao Gang shows no loss of appetite for risk taking. (Bloomberg) SSE & CDC Jointly Release the Measures on Treasury Bond When-Issued Trading Transaction, Registration and Settlement Business | (Chinese only) Shanghai Stock Exchange (SSE) and China Securities Depository and Clearing Co.(CDC), jointly released the Measures on Treasury Bond When-Issued Trading Transaction, Registration and Settlement Business (the "Measures"). The Measures specify the categories of investors may participate in the treasury bonds pre-issuance transactions, namely securities companies, banks, fund managers, insurance companies and other financial institutions that are eligible to participate in bond trading in the SSE, also other professional investors who meet relevant provisions. Meanwhile, the Measures specify that only the members of the underwriting syndicate for treasury bonds can be net sellers in treasury bonds pre-issuance transactions while other professional investors may not do so; that is, they can only sell after buying. (NAFMII Newsletter) HONG KONG Third Meeting of Hong Kong – London RMB Forum The Forum participants reviewed the latest developments in the international RMB market. Participants noted the strengthening of cross-border trade settlement activities and the expansion of RMB products and services, especially in foreign exchange and also in the availability of a wide range of hedging and other investment products. HKMA issues circular in relation to liquidity risk management The Hong Kong Monetary Authority (HKMA) has issued a circular to authorised institutions advising them of the approach it will adopt in implementing the provisions relating to liquidity cushions set out in section 8 of the Supervisory Policy Manual module LM-2 on sound systems and controls for liquidity risk management issued on 1 April 2011. SFC and SEHK publish revised Joint Policy Statement regarding listing of overseas companies The revised Joint Policy Statement consolidates all relevant issues regarding listing of overseas companies into a single document. It is comprehensive, and should facilitate a clear understanding of the ways in which listing of overseas companies can be achieved in line with regulatory expectations,” the SFC’s Chief Executive Officer, Ashley Alder said. SINGAPORE "Global Regulatory Reforms: What’s Done, What To Watch For" Opening Remarks by Ravi Menon, Managing Director, Monetary Authority of Singapore at the 4th Pan-Asian Regulatory Summit on 25 September 2013. INDIA India urged to allow greater foreign access to bond markets India should introduce a wholesale liberalisation of rules restricting foreign investors from participating in domestic bond markets, according to a report produced by the country’s main financial markets regulator. (FT) India's Central Bank Says Will Ensure Adequate Cash Availability India's central bank said it would ensure that adequate cash is available in the banking system to meet demand for loans, as liquidity conditions have become tight following last week's surprise interest-rate increase.(WSJ) Rajan Seen Switching Main India Inflation Gauge at RBI: Economy Reserve Bank of India Governor Raghuram Rajan is set to use consumer-price inflation as the main guide for monetary policy for the first time, a shift that signals further increases in the benchmark interest rate.(Bloomberg) IIFC UK asked to increase loans to Indian firms The government is pushing the UK arm of infrastructure financing firm India Infrastructure Finance Corporation to expand its portfolio to meet the increasing demand for dollar denominated loans from domestic companies amid a sharp fall in the rupee. "In the current scenario, when Indian firms are finding it difficult to manage dollar denominated loans because of the fall in the currency, IIFC (UK) can refinance them at cheaper rates for longer tenure," said a senior finance ministry official. (Economic Times) Bimal Jalan will look into new bank licences after RBI scrutiny The proposed external committee will look into new bank licence applications once RBI completes the basic scrutiny, said Bimal Jalan who heads the High Level Advisory Committee (HLAC). "Work is still in progress. The Reserve Bank has received applications. It is doing first round of scrutiny. Then we will see how we go about it," Jalan said at AIMA event here today. (Economic Times) India makes it easier for local companies to list and raise capital overseas Faced with high current account deficit (CAD), the government today allowed unlisted companies to directly list on stock exchanges abroad to raise funds for acquisitions or retiring debts. As of now, unlisted companies are not allowed to directly list in overseas markets without prior or simultaneous listing in Indian markets. (Economic Times) Regulatory panel says remove cap on foreign investment in rupee debt A research paper published by an internal department of the SEBI said the rationale behind limiting foreign ownerships of Indian debt was not in line with the current economic policy goals. The research was conducted by SEBI's Development Research Group and its recommendations are non-binding. (Reuters) Infrastructure debt funds norms tweaked to give infra funds more leeway In order to augment resources for infrastructure, debt funds for this purpose under the NBFC route will now be eligible for recovering bad debts from defaulters without intervention of courts. The Cabinet Committee on Economic Affairs has approved a proposal to allow infrastructure debt funds (IDFs) access to provisions of the SARFAESI Act. The Act empowers banks and financial institutions to recover their non-performing assets without the intervention of the court. (Business Standard) SEBI Development Research Group Study No. 1: Foreign Investment in Indian Government Bond Market The Securities and Exchange Board of India released the Development Research Group (DRG) Study titled, “Foreign Investment in Indian Government Bond Market”. The study is co-authored by Prof. Ila Patnaik, Dr. Sarat Malik, Radhika Pandey and Prateek. JAPAN Japan’s real borrowing rate turns negative Japan’s real cost of long-term borrowing has dropped below zero, bringing an end to years of high real rates and marking a milestone for “Abenomics”. Negative real interest rates are a key feature of Shinzo Abe’s war on deflation, which aims to encourage bond-heavy investors to seek higher returns through domestic stocks, loans or property, or by buying assets abroad. (FT) Japan Looks to Southeast Asia for Yield The Ministry of Finance is now nudging institutional investors — including the giant Government Pension Investment Fund — to take more risks and seek higher returns, partially through investments in the bonds of emerging Asian economies. (WSJ) Yoshihisa Morimoto: Economic activity and prices in Japan and monetary policy Speech by Mr Yoshihisa Morimoto, Member of the Policy Board of the Bank of Japan, at a meeting with business leaders, Iwate, 29 August 2013. Japanese Panel Signals Mighty Shift on Bonds Japan took a step toward revamping its roughly ¥160 trillion ($1.6 trillion) public-pension system, with a government-appointed advisory panel suggesting a shift in some investments from government bonds to higher returning assets like real estate and private-equity funds. (WSJ) SOUTH KOREA South Korea Woos Foreign Capital Private-equity investments are rising in Korea, and the Financial Services Commission will introduce a new plan to ease rules for private equity in October, the regulator’s chairman, Shin Je-yoon, said at a seminar this week. (WSJ) Seoul Tackles Companies’ Instinct to Hoard Cash The finance ministry unveiled a set of measures aimed at stimulating corporate investment, the third of its kind since President Park Geun-hye took office in February. The latest package is focused on easing regulations and increasing financial and tax support for businesses. (WSJ) PHILIPPINES Philippines central bank in broad Islamic finance push "There is renewed interest in this and the key drivers are the peace initiative in Mindanao as well as broad initiative of the BSP to create a more inclusive financial system," Nestor Espenilla, Deputy Governor of the Bangko Sentral ng Pilipinas. (Reuters) Report on Economic & Financial Developments An outlook of the performance of the Philippines economy in Q2 3013. THAILAND Thai central banker warns on subsidies largesse Thailand’s central bank chief on Friday fired a broadside against populist government policies, echoing wider fears that climbing consumer debt levels and more spending on commodity subsidies are undermining Southeast Asia’s second-largest economy. (FT) Thailand Discusses ASEAN-US Cooperation Deputy Prime Minister and Foreign Minister Surapong Tovichakchaikul has stressed that the ASEAN-US partnership must be responsive to the emerging non-traditional security challenges, including energy security and climate change. INTERNATIONAL Banks’ Off-Balance Sheet Risks Come Under Basel Scrutiny The Basel group is seeking to put a ceiling on indebtedness that will prove robust no matter how complicated a bank’s business model, Stefan Ingves, its chairman, said in an interview. “We want to catch leverage in a reasonable way, because one of the things that history has taught us is that when you look at episodes ex-post, when things fall apart, the conclusion is almost always that there was somehow too much leverage in the system and it was found out way too late,” said Ingves, who is also governor of Sweden’s central bank. (Bloomberg) BIS Press Release Basel III monitoring results published by the Basel Committee Joachim Nagel: How market segments changed over the crisis - challenges for future banking Sabine Lautenschläger: Supervisors without borders Andreas Dombret: Resilient banks - essential building blocks of a stable financial system Jan Sijbrand: Ethics and the crisis in the financial sector UNITED STATES Government Heads Toward Shutdown The nation braced for a partial shutdown of the federal government, as time for Congress to pass a budget before a Monday midnight deadline grew perilously short and lawmakers gave no signs Sunday they were moving toward a resolution. (WSJ) US to hit debt ceiling by 17 October, says Treasury Secretary Lew The US will hit its debt ceiling by 17 October, leaving the government with half the money needed to pay its bills, the Treasury Secretary has warned. (BBC) EUROPE Possibility of Delay Threatens European Bank Overhaul and the Region’s Economy Mario Draghi will soon get another job besides being president of the European Central Bank: chief zombie hunter.If all goes as planned, by November European political leaders will anoint the central bank as supreme bank enforcer of the euro zone, with the power to separate healthy banks from the walking dead that are sucking the life from the region’s economy. (NY Times) ECB collateral rules to increase ABS eligibility apply from October The European Central Bank's new collateral rules that let banks use more of the assets once blamed for triggering the financial crisis in the central bank's refinancing operations will come into force in October, the ECB said on Friday. (Reuters) EU Council sets out position on proposed regulation on central securities depositories The Permanent Representatives Committee has agreed, on behalf of the EU Council, its position on the proposed regulation on improving securities settlement in the European Union and on central securities depositories (CSDs) and amending Directive 98/26/EC. The agreement will enable the EU Council Presidency to start negotiations with the EU Parliament with the aim of adopting the regulation at first reading.    The EU Parliament's Economic and Monetary Affairs (ECON) Committee publishes report on single resolution mechanism for banking union The ECON Committee has published a draft report on the EU Commission's proposed regulation on the single resolution mechanism, namely the regulation on establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Bank Resolution Fund and amending Regulation (EU) No 1093/2012. EU Mulls $68 Billion Fund to Aid Non-Euro Banks The European Union is weighing whether a 50 billion-euro ($68 billion) rescue fund can be turned into a bank backstop for member states outside the single-currency bloc. (Bloomberg) EU watchdog wants to charge foreign clearing houses The European Union's markets watchdog wants to charge foreign clearing houses seeking to cash in on new derivatives rules being introduced across the 28-country bloc, an EU document showed on Saturday. (Reuters)