ASIFMA - 26 Nov - 03 DeC 2013 | Issue 182

26 Nov - 03 DeC 2013 | Issue 182 Spotlight Mark Austen Comment -- EU derivatives measures worry Asian policy makers Asian financial market policy makers are becoming increasingly concerned with extraterritorial measures emanating not from the US, but from Europe. While swaps dealer registration, swap execution facilities and the Volcker rule have grabbed the attention, there are a number of developments in Europe that are causing as much consternation – if not more – in Asia. (FT) Markit to deploy compliance solution for equity trading in HK Markit has been selected by members of ASIFMA to provide the online solution to facilitate compliance with Hong Kong’s SFC new electronic trading rules. Mark Austen, CEO of ASIFMA, said: “The industry standard questionnaire facilitates and greatly simplifies the due diligence process required to comply with the new Hong Kong Securities and Futures Commission rules. However, without a technology solution, exchanging information would remain a manual, bilateral process. Markit’s technology will replace the need for a mass of bilateral conversations and the management of a large volume of pages of documentation that would be required in the absence of an automated solution.” (The Asset) China releases more details on Shanghai free trade zone reforms Chinese regulators published new details on planned reforms for a free trade zone launched in Shanghai earlier this year, as Beijing moves to sustain enthusiasm in the face of resurgent investor skepticism. The list of reforms was more detailed than previous lists but did not increase the proposed net scope of reforms in the zone, which already includes deep changes to the country's exchange rate regime, cross-border investment flows and interest rates, alongside wide-ranging reforms to trade in goods and services. (Reuters) Update CHINA Xi stresses reform confidence Chinese President Xi Jinping has called for confidence in realizing further reform and determination to overcome difficulties."All Party members should be confident that China's reform blueprint will be realized. No matter what difficulties and disturbances we encounter, we shall not swerve from the reform," said Xi. (Xinhua) China promises to loosen capital control, but no rapid progress expected Central bank governor Zhou Xiaochuan says the central government will simplify administrative measures governing foreign exchange, create a negative list showing the sectors where direct investment will be prohibited and will expand quotas under the Qualified Domestic Institutional Investor and Qualified Foreign Institutional Investor programmes by 2020. (SCMP) CBRC issues administrative measures for qualification management over directors and senior managers in the banking sector | (Chinese only) CBRC issued the Administrative Measures for Qualification Management over Directors and Senior Managers in Banking Institutions (Measures), effective as of December 18, 2013. The Measures are more complete and specific compared with the previous regulations. In terms of qualification management, the Measures not only stipulate entry criteria and procedures for directors and senior managers, but also add provisions on ongoing supervision. (NAFMII Newsletter) China seeks closer ties with France through yuan Senior officials of China and France have agreed to promote the development of the offshore yuan market in Paris and seek closer bilateral economic relations. The agreement was noted in a joint statement after the First China-France High-Level Economic and Financial Dialogue in Beijing. Vice-Premier Ma Kai said at the dialogue that China will consider supporting the offshore yuan market in the French capital through the renminbi qualified foreign institutional investor mechanism "at the appropriate time". (China Daily) This is the moment for stronger China-UK collaboration: president Xi Chinese President Xi Jinping on Monday said now is the right time for China and the United Kingdom to seek stronger cooperation. "We are transforming the mode of economic development, restructuring the economy and encouraging companies to go abroad quickly, while the UK is boosting reform and welcomes foreign investment. This is the moment for stronger cooperation," Xi told visiting British Prime Minister David Cameron.(Xinhau) HONG KONG HKMA's Norman Chan easily spooked by what the US probably won't do Hong Kong Monetary Authority chief executive Norman Chan Tak-lam warned all local businesses and investors to beware of the risks of an outflow of funds and a sharp rise in interest rates if, as expected, US monetary policy changes next year. (SCMP) Can Central Banks Save the World? Keynote Address by Norman Chan, Chief Executive, Hong Kong Monetary Authority (at the 19th Annual Hong Kong Business Summit Luncheon) HKEx and China Futures Association Sign MOU Hong Kong Exchanges and Clearing Limited (HKEx) and the China Futures Association (CFA) signed a Memorandum of Understanding (MOU) today (Monday) on cooperation and the exchange of information. OTC Clear: Building out a new asset Today marks an important milestone for HKEx, as we have officially launched our over-the-counter (OTC) derivatives clearing house, OTC Clear. The launch may not attract much attention locally or internationally, but it does represent an important step for us in fulfilling our long-term strategy to diversify into more asset classes and develop Hong Kong as a comprehensive financial centre. Market Rehearsal and Post-relocation Connectivity Test for Relocation of CCMS to Tseung Kwan O Data Centre – Phase Two Phase One has been completed successfully on 3 November 2013. Clearing Participants are requested to note that to ensure a smooth relocation of the data centre for CCMS to TKODC, Hong Kong Exchanges and Clearing Limited (HKEx) will conduct Market Rehearsal (MR2) and Post-relocation Connectivity Test (CT2) for Phase Two with the following details. QDII3 to benefit Hong Kong, say bankers Bankers and brokers believe a HK$100 billion investment scheme, dubbed QDII3, in the Qianhai economic zone in Shenzhen would benefit Hong Kong's standing as an offshore yuan centre in the face of overseas challengers but say it could take a long time for Beijing to approve it. The scheme was proposed by a Hong Kong government advisory panel last week. (SCMP) SINGAPORE MAS: Consultation Paper on the Review of the Banking Act MAS proposes several changes to the Banking Act (“BA”) to, inter alia, strengthen its supervisory oversight over banks and codify MAS’ expectations as to the risk management practices that banks should implement. MAS: Insurance sector needs more sustainable approach for long-term profitability The Monetary Authority of Singapore (MAS) said the insurance sector needs a longer-term and more sustainable approach to achieve long-term profitability. This is because insurers' profitability comes under pressure amid heightened market volatility and a low-yield environment. (Channel News Asia) SGX and CSRC to establish direct listing framework The Singapore Exchange (SGX) and the China Securities Regulatory Commission (CSRC) have announced that they will establish a direct listing framework for Chinese companies to list in Singapore. Under the new arrangement, companies incorporated in China that have obtained the approval of CSRC will be able to seek a listing on the SGX. (The Trade) INDIA Government to soon clear confusion over foreign investor tax regime The Government will come up with a solution to clear the prevailing confusion around the tax regime for foreign portfolio investors (FPIs) in the next fortnight, a top Finance Ministry official said today. "We have some tentative solutions, Sebi has come up with some solutions. My sense is that in a couple of weeks we should be able to figure out a solution which is acceptable to foreign participants and to the Revenue Department," K P Krishnan, Additional Economic Affairs Secretary, said. (Economic Times) India for developing economic corridors cross Asia India today underlined the need for developing economic corridors for seamless connectivity across Asia to bring people and regional economies closer for mutual benefit. Speaking at the 12th Asia Cooperation Dialogue (ACD) Foreign Ministers Meeting in Bahrain capital, Manama, E Ahamed, Minister of State for External Affairs, said, "We want to develop economic corridors across Asia providing hope, opportunity and efficiency to our mutual benefit." (Economic Times) RBI eases rules for foreign banks’ subsidiarisation The Reserve Bank of India on Tuesday clarified that foreign banks planning to incorporate in the country will be exempted from paying capital gains and stamp duty, a move that will nudge big boys of banking to operate as wholly-owned subsidiaries. (Economic Times) Asian Development Bank plans rupee denominated bonds Multilateral funding agency Asian Development Bank (ADB) today said it is planning to raise funds by issuing rupee denominated bonds. "We are looking at that...offshore rupee bonds," said Narhari Rao, officer in-charge ADB India resident mission, at an event here. (Economic Times) Smoothen regulatory bumps on infrastructure highway: IFC to India The International Finance Corporation, the World Bank's private sector financing arm that recently concluded its first-ever global issue of rupee-linked bonds, has urged India to simplify its complex regulatory landscape and aggressively tap domestic investors to finance its massive infrastructure building plans instead of relying on foreign capital. (Economic Times) Tax reforms panel keen to improve dispute resolution mechanism The Tax Administration Reforms Commission (TARC) will set up focused groups to identify quicker solutions for long-term issues the Income-Tax Department and taxpayers are grappling with. These groups will involve private sector representatives as well as revenue officials, TARC Chairman Parthasarathi Shome said. (Hindu Businessline) Inclusion of bonds in global bond indices not an urgent concern: Mayaram The government does not see inclusion of bonds into global bond indices as an urgent concern. “It would be interesting to be on the global indices, but it is not a matter which is emergent or so urgent that it would require an immediate decision,” Economic Affairs Secretary Arvind Mayaram said. According to Mayaram, there are deliberations going on. “The Reserve Bank of India (RBI) is fully engaged with this exercise. We must wait for the deliberations to end because you cannot have a presumption on a decision,” he added. Mayaram said India was looking at making rupee settlements eligible in Euroclear debt platforms. (Business Standard) Sebi committee on insider trading norms may submit report next week A Sebi panel set up to strengthen regulatory framework to contain insider trading is expected to submit its report next week. "They have almost finalised it. I'm informed they are planning to submit it (the recommendations) in a week's time or maximum 10 days," UK Sinha, chairman of the capital market regulator, said. (Economic Times) BSE in process of completing IPO formalities Leading stock exchange BSE today said it is in the process of completing formalities for its initial public offering (IPO). "BSE is specifically in the process of completing all the formalities. As and when the approval will be obtained, the IPO will come," BSE Managing director and CEO Ashishkumar Chauhan said. (Economic Times) India emerges most attractive investment destination With relaxation in FDI norms to boost investor sentiments, India has emerged as the most attractive investment destination surpassing neighbouring China and the US, says a report. The global survey of leading consultancy firm EY has ranked India as the most attractive investment destination followed by Brazil and China at second and third positions, respectively. (Economic Times) JAPAN Japan sets up expert panel to study benchmark rate regulation Japan's finance-industry regulator has set up a panel to study regulation of the country's financial benchmarks as part of increased global scrutiny following public outrage over scandals involving manipulation of interbank lending rates. (Reuters) AUSTRALIA RBA Holds Key Rate at Record-Low 2.5% as Currency Pressure Eases Australia’s central bank left its benchmark interest rate unchanged at a record low as a weakening currency boosts export industries, aiding the economy’s transition from resource-investment led growth. Governor Glenn Stevens and his board kept the overnight cash-rate target at 2.5 percent, the Reserve Bank of Australia said in a statement today in Sydney. The decision was predicted by all 30 economists surveyed by Bloomberg News and markets had priced in almost no chance of a move. (Bloomberg) SOUTH KOREA South Korea launches preliminary talks to review joining TPP South Korea launched preliminary bilateral talks Tuesday to review whether to join the US-led Trans-Pacific Partnership, a multilateral trade pact in the Pacific region. South Korean Trade Minister Yoon Sang-jick held a dialogue with his New Zealand counterpart Tim Groser in Bali, Indonesia where the two ministers visited to participate in the World Trade Organization Ministerial Conference, according to the Ministry of Trade, Industry and Energy. (Global Times) INDONESIA Bank Indonesia: No need to panic over rupiah`s tumble against dollar Bank Indonesias governor has urged economic participants in the country not to panic over the depreciation of the rupiah to 12 thousand against the US dollar. "We must remain calm and continue our activities as before. The rupiahs depreciation to 12 thousand against the US dollar is mainly because of global conditions," central bank governor Agus Martowardojo said here on Friday. He said global unease, especially about the Federal Reserves tapering of monetary stimulus, is contributing to pressure on the exchange value of the rupiah. (Antara News) Indonesia hoping Bali Package will be approved at WTO meeting Indonesia is hoping that the Bali Package will be discussed at the upcoming 9th World Trade Organization (WTO) meeting and will be agreed upon by all members. "If the whole package is accepted, it will be a phenomenal success after 12 years," Indonesias Deputy Trade Minister Bayu Krisnamurthi told newsmen on Friday. He further said that the next WTO ministerial-level meeting would be deemed successful if the Bali Package covering trade facilitation, agriculture and least developed countries (LDCs) was agreed upon, if issues not yet agreed upon were discussed further and those already agreed upon were approved. (Antara News) THAILAND ADB to lower GDP view to 3% The Asian Development Bank (ADB) is expected to cut its GDP growth forecast for the Thai economy this year to around 3%, says Luxmon Attapich, senior country economist for ADB Thailand. Sluggish third-quarter economic growth and weak export data contributed to the decision. (Bangkok Post) Thai central bank cuts rate Thailand’s central bank unexpectedly cut its benchmark interest rate a quarter of a point to 2.25%, saying political tension is affecting investor confidence and there’s no sign of exports recovering. (The Star) PHILIPPINES Purisima urges financial services industry to help in rebuilding efforts Finance Secretary Cesar Purisima has called on the local financial services industry as well as the country’s businessmen to help the government in its efforts to speed up the economic recovery of the storm-ravaged areas in the Visayas. During the Bureau of Treasury’s launch of the treasury single account (TSA) Monday, Purisima said the banking community should come up with a package that will make it easier for business establishments and millions of Filipinos affected by Super Typhoon Yolanda to rise above crisis. (Philstar) MYANMAR Myanmar revises plan for developing Dawei SEZ Myanmar has revised its plan of developing its Dawei Special Economic Zone (SEZ) in southern Tanintharyi region, seeking partnership mainly with Japanese consortium and other international investors and developers in addition to Thailand for the implementation of the SEZ project. (Xinhua) INTERNATIONAL Update To EU Commissioner Barnier On Further Action on Recognition of Asia Pacific Central Counterparties under EMIR Asia regulators attack EU over clearing house standards Europe has come under attack from Asian market regulators who are warning that the one-size-fits-all tests for clearing houses will hamper business and liquidity in their region. The criticism shows divisions over the implementation of landmark G20 reforms of the financial system that have created friction between the US and Europe are now spreading to Asia. (FT) UNITED STATES CFTC Staff Issues Time-Limited No-Action Letter on the Applicability of Transaction-Level Requirements in Certain Cross-Border Situations CFTC Divisions of Swap Dealer and Intermediary Oversight (DSIO), Clearing and Risk, and Market Oversight (collectively, the Divisions) issued a time-limited no-action letter today that provides relief to swap dealers (SDs) registered with the CFTC that are established under the laws of jurisdictions other than the United States (Non-U.S. SDs) from certain transaction-level requirements under the Commodity Exchange Act. Chamber Asks Volcker Rule Rewrite as U.S. Agencies Near Deadline The U.S. Chamber of Commerce called for delaying approval of the Volcker rule ban on proprietary trading by banks as regulators approach a year-end deadline set by the White House to complete the proposal. In a letter sent to regulators today, the business group said the proposal should be rewritten because “many fundamental issues” have emerged since the comment period closed. (Bloomberg) Regulators, Divided Over 'Volcker Rule,' Weigh Going It Alone Bank regulators are considering passing the 'Volcker rule' without the blessing of the Commodity Futures Trading Commission, which has been pushing for 11th-hour changes ahead of a year-end deadline to finalize the regulation, according to people familiar with the process. (WSJ) EUROPE ECB warns of danger from Federal Reserve’s policy shift The European Central Bank yesterday issued a warning of the threat posed by the scaling back of monetary stimulus in the US. It called on the currency bloc’s policymakers to prepare for the ill effects of Federal Reserve tapering. (Irish Times) ECB's Constancio Says Banking Union Will Boost M&A The European Union's banking union will accelerate the consolidation of its banking sector, giving more opportunities and greater regulatory certainty for mergers and acquisitions, European Central Bank Vice President Vitor Manuel Ribeiro Constancio said. (WSJ) Weidmann Says ECB Council Shouldn’t Permanently Supervise Banks Bundesbank President Jens Weidmann said the European Central Bank’s Governing Council should only temporarily be responsible for banking supervision. “The decision-making body responsible for monetary policy should not be in charge of supervising banks as well,” Weidmann said in a speech. (Bloomberg) ESMA Branches Out | Non-EU Firms To Be Caught By EMIR The reach of the European Market Infrastructure Regulation (EMIR) is widening with branches of non-EU financial institutions clearly on the radar of European regulators. The recently published draft rules from the European Securities and Markets Authority (ESMA) make clear that EU regulators intend to have their arms around the widest possible set of OTC derivatives transactions if they could pose a threat to financial stability within the EU. (Mondaq) Britain and Ireland move early to shorten stocks settlement The mandatory settlement time for share trades in Britain and Ireland will be cut by a day from October next year to pre-empt new European Union rules aimed at improving market efficiency, settlement house Euroclear said. (Reuters)