ASIFMA - 08 - 13 NOVEMBER 2013 | Issue 179

08 - 13 NOVEMBER 2013 | Issue 179 Spotlight ASIFMA Annual Conference 2013: Developing Asia's Capital Markets -- 20 and 21 November in Hong Kong ASIFMA, GFMA's Asian affiliate, is proud to present the Annual Conference 2013 on 20 and 21 November in Hong Kong, with the theme for this first-of-a-kind, two-day event as "Developing Asia's Capital Markets". The conference is an industry wide occasion, providing a unique opportunity for global and regional policymakers, high-level regulators and industry representatives from sell- and buy-side firms to meet and discuss important issues affecting the development of Asian capital markets. Funding access to China’s private profitable companies urged Mark Austin, chief executive officer of the Asia Securities Industry & Financial Markets Association (ASIFMA), believes that "given the economic climate in Asia, an increasing number of corporates will default in the next six to 12 months [accompanied with a] spike in restructurings. In particular, we see a pressing need to discuss issues surrounding China's potentially looming credit crunch," he added. China Third Plenum: Leaders unveil key reforms China's leaders have unveiled a series of reforms aimed at overhauling its economy over the next decade. In a statement issued after a closed-door summit, they promised the free market would play a bigger role. (BBC) Regulatory Oversight Committee Endorsement Note - Takasbank and the London Stock Exchange In early October, two ROC sponsors sought endorsement for two additional pre-LOU candidates. Turkey Capital Markets Board presented endorsement materials for Takasbank; and the UK Financial Conduct Authority presented endorsement materials for the London Stock Exchange. Update CHINA PBC Approved 10 Foreign Institutions to Enter the Interbank Bond Market | (Chinese only) The Central Bank recently approved 10 foreign institutions to enter the interbank bond market in China. These ten institutions are of two categories. The first category is overseas affiliates of Chinese financial institutions, totally seven, including ICBC (Indonesia) Limited, ICBC (London) Limited, ICBC (ALMATY) Limited, ICBC (Canada) Limited, ICBC (Middle East) Limited, ICBC (Moscow) Limited and ICBC Ltd Singapore Branch. The second category is overseas financial institutions, totally three, including Offshore Banking Unit of First Commercial Bank, Jih Sun International Bank and Hang Seng Insurance Company Limited. China Vows Bigger Role for Markets as Party Closes Summit China elevated the role of markets while maintaining the state’s dominance in the nation’s economic strategy, seeking to balance finding new sources of growth with sustaining the Communist Party’s grip on power. (Bloomberg) China Development Bank to launch ABS backed by railway loans China Development Bank (CDB) plans to sell asset-backed securities backed by an 8 billion yuan ($1.3 billion) loan to the country's state railway operator this month, sources with direct knowledge of the matter told Reuters on Tuesday. CDB, one of three Chinese policy lenders that support government-backed projects, is expected to issue the asset-backed securities (ABS) in the interbank market around Nov. 20. (Reuters) Registration eased for foreign firms Foreign companies in China should see an easing of company registration requirements like the ones their Chinese counterparts enjoy, an official said on Thursday. According to the "national treatment" principle, when the government lowered the threshold for business startups, foreign businesses in China should receive the same treatment, Zhang Mao, head of the State Administration of Industry and Commerce, confirmed at a news conference in Beijing on Thursday. (China Daily) China Muni-Bond Stalling Shows Debt Threat as Party Meets Two years after China started a trial municipal-bond program, plans to take it nationwide have stalled, leaving local authorities reliant on off-budget funding fueled partly by land seizures. (Bloomberg) China Grants U.S. Investors Indirect Access to Its Stock Markets Beijing has approved the first U.S. exchange-traded funds that track stocks in mainland China, another step forward in opening the country's capital markets to international investors seeking better exposure to the world's second-biggest economy. (WSJ) Cameron to lead China trade delegation David Cameron is to lead a delegation of ministers and business figures to China next month, he has announced. The move represents a warming of relations after a dispute over the PM's decision to meet the Dalai Lama in May. And it comes a month after the chancellor, George Osborne, fronted a business delegation to China. (BBC) Chinese FM expresses great expectation of Asia-Europe ties Chinese Foreign Minister Wang Yi said here Monday that the relations between Asia and Europe are becoming tighter and the perspective of their cooperation wider against the backdrop of globalization and information age. (Xinhua) Britain considering London yuan clearing bank - minister Britain is considering setting up a London-based clearing bank for the offshore yuan market to improve liquidity, a government minister said on Tuesday. (Reuters) HONG KONG HKEx welcomes first offer of RMB sovereign bonds through its facilities Hong Kong Exchanges and Clearing Limited (HKEx) welcomes the decision by the Ministry of Finance of the People’s Republic of China (MoF) to list renminbi (RMB)-denominated sovereign bonds again on its Stock Exchange (the Exchange), and for the first time use the Exchange’s facilities for a public offer of its bonds. HKMA Bets on London With Half of $764 Million Mayfair Project Hong Kong’s banking regulator bought 50 percent of a project in London’s luxury-shopping district from Great Portland Estates Plc (GPOR), adding to a wave of Asian investment in the city. The completed development could be valued at as much as 475 million pounds ($764 million). (Bloomberg) SINGAPORE MAS publishes Securities and Futures (Trade Repositories) (Amendment) Regulations 2013 The Monetary Authority of Singapore (MAS) has published the Securities and Futures (Trade Repositories) (Amendment) Regulations 2013. The amendment revises the Second Schedule to the Securities and Futures (Trade Repositories) Regulations 2013 which provides for annual fees under section 46F(1) for licensed trade repositories and licensed foreign trade repositories. INDIA RBI amends requirements on issue of foreign currency convertible bonds and ordinary shares Following the announcement made by the Ministry of Finance (MOF) on 27 September 2013 allowing unlisted Indian companies to list and raise capital abroad without the requirement of prior or subsequent listing in India, the RBI has issued a circular to amend the Issue of Foreign Currency Convertible Bonds and Ordinary Shares RBI releases Framework for setting up of Wholly Owned Subsidiaries by Foreign Banks in India The Reserve Bank of India (RBI) today released on its website, the framework for setting up of Wholly Owned Subsidiaries (WOS) by foreign banks in India. The policy is released in pursuance of the announcement made in the Second Quarter Review of Monetary Policy 2013-14. Government looks to ease foreign institutional investors cap in bonds The government and the financial regulators may move from a fixed ceiling on investment by foreign institutional investors (FIIs) in government securities and link it to the proportion of gross domestic product (GDP) after facing hurdles in getting a share of the flow in bonds earmarked for emerging markets. (India Times) RBI opens doors to M&As for foreign banks in India Reserve Bank of India Governor Raghuram Rajan threw open the doors for mergers and acquisitions in the banking space as he delivered on the promised level-playing field for foreign banks such as Citigroup and HSBC. (Economic Times) JAPAN BOJ Kuroda offers upbeat view on China, U.S. outlook despite risks Bank of Japan Governor Haruhiko Kuroda voiced confidence on Tuesday that the economies of China and the U.S., Japan's two big export markets, will continue to recover and help achieve the central bank's 2 percent inflation target. (Reuters) Abenomics Buoys Investors' Confidence Foreign investors are pouring billions of dollars into Japanese stocks as Prime Minister Shinzo Abe keeps up his resolve to bolster the country's long-troubled economy. (WSJ) AUSTRALIA Australia's Central Bank Cuts Growth Estimate Australia's central bank lowered its growth forecast for next year, saying mining investment may drop off more sharply than expected and that an elevated local currency was likely to hurt sales of manufactured products. (WSJ) NEW ZEALAND Reserve Bank focuses on maintaining sound financial system New Zealand’s financial system remains sound, Reserve Bank Governor Graeme Wheeler said today, when releasing the Bank’s November 2013 Financial Stability Report. “Banks are well capitalised and have strengthened their funding base, while non-performing loans continue to decline. SOUTH KOREA South Korea’s derivatives decline threatens equity trade South Korea’s derivatives market, once the world’s largest by trading volume, is suffering a sharp drop in liquidity as stricter regulations damp appetite and drive investors to neighbouring markets in China and Japan. (FT) INDONESIA Bank Indonesia Surprises on Rates in Step to Boost Rupiah Appeal Indonesia raised interest rates to the highest level since 2009 to sustain overseas demand for the currency even as it risks hurting growth in Southeast Asia’s biggest economy. INTERNATIONAL FSB publishes its annual update of the group of global systemically important banks (G-SIBs) Industrial and Commercial Bank of China Limited - has been added to the list of banking groups identified as G-SIBs in 2012, increasing the overall number from 28 to 29. G-SIBs are banks that have been identified as globally systemically important financial institutions (G-SIFIs). FSB launches Quantitative Impact Study (QIS2) on proposed regulatory framework for haircuts on securities financing transactions The FSB is launching on 5 November 2013 the second stage of its two-stage quantitative impact study (QIS) on the proposed regulatory framework for securities financing transactions. The FSB is inviting interested market participants to voluntarily participate in the exercise. CPSS-IOSCO publish the responses to the consultation on recovery of FMIs The report, published in August 2013, provides guidance to FMIs on how to develop plans to recover from threats to their viability and financial strength that might prevent them from continuing to provide critical services to their participants and the markets they serve. Multi-national ratings agency to launch as alternative to Big Three In a statement on Tuesday, ARC Ratings said it would officially launch on Nov. 20 in London as a joint venture between CPR of Portugal, CARE Rating of India, GCR of South Africa, MARC of Malaysia, and Brazil's SR Rating. (Reuters) EU and US resume trade deal talks The EU and US have begun a second round of negotiations towards creating the world's biggest free-trade deal. Talks on the Transatlantic Trade and Investment Partnership (TTIP) had been set for October, but were postponed because of the US government shutdown. Global Central Banks Seek Shelter From Fed Tapering Daniel Mminele, deputy governor of the South African Reserve Bank, said this week that the bank is "acutely aware of the risks" of the U.S. Federal Reserve winding down its monetary stimulus and had decided to protect itself against the higher U.S. Treasury yields that are expected to result. (WSJ) 20 per cent of top banks may shrink or merge, McKinsey says The number of global universal banks may drop to fewer than 10 from about 25 as they narrow their focus on products or regions, the consulting firm said in an annual review of the industry released today. (Bloomberg) UNITED STATES White House to nominate Tim Massad as chairman of CFTC The White House nominated Timothy Massad, a US Treasury official, to be the next chairman of the Commodity Futures Trading Commission, finally ending the uncertainty surrounding the agency’s leadership. (FT) EUROPE ECB's Weidmann calls for earlier introduction of bail-in rules Rules ensuring that banks' bondholders and big depositors share the costs of any lender failing should be introduced earlier than currently planned, European Central Bank Governing Council member Jens Weidmann said on Tuesday. (Reuters) ECB publishes its opinion on the Single Resolution Mechanism (SRM) The ECB fully supports the establishment of a Single Resolution Mechanism. It believes that centralised decision-making on resolution matters will strengthen the stability of Economic and Monetary Union and that the SRM will provide a necessary complement to the single supervisory mechanism. ECB report details structural changes in the euro area banking sector The European Central Bank (ECB) is today releasing the Banking Structures Report, which analyses the main structural developments in the euro area banking sector: the capacity, consolidation and concentration of banks and related changes over time. The report covers the period from 2008 to 2012 and includes indicators for the first half of 2013. EU executive rejects delay in derivatives reporting Users of all financial derivatives in the European Union will have to report their trades from February after the bloc's executive vetoed a request from regulators for a delay. (Reuters) ESMA publishes updates Q&As The European Securities and Markets Authority (ESMA) has published an update of its Question and Answers (Q&A) on the European Markets Infrastructure Regulation (EMIR). US, UK, German and Swiss regulators call for uniform derivatives contracts language The Federal Deposit Insurance Corporation (FDIC), the Bank of England (BoE), the German Federal Financial Supervisory Authority (BaFin), and the Swiss Financial Market Supervisory Authority (FINMA) have published a joint letter encouraging the International Swaps and Derivatives Association (ISDA) to adopt language in derivatives contracts to delay the early termination of those instruments in the event of the resolution of a global systemically important financial institution (G-SIFI). Germany Clashes With France Over Power to Close Failing Banks Europe’s two biggest economies clashed over awarding the power to close failing banks, with Germany saying the onus must be on national governments and France opting to give the final say to the European Commission. (Bloomberg) Germany Sees Giving EU Council Power to Shutter Euro Banks Germany has proposed giving the Council of the European Union, which represents member states’ governments, the final say in closing some failing banks, a German official said. The government of Chancellor Angela Merkel has led opposition to a proposal from Michel Barnier, the EU’s financial-services chief, for a Single Resolution Mechanism to handle euro-area bank failures, claiming the plan is on shaky legal ground and could endanger national control of budgets. (Business week)