| | 07 - 14 JANUARY 2014 | Issue 186 Spotlight Volcker to test Asian liquidity "Lawmakers have been responsive to banks' concerns, but, in some cases, they didn't really dig deep into the details and didn't do enough due diligence into how the market works," said Mark Austen, CEO of Asia Securities Industry & Financial Markets Association, an industry body. "They probably would have benefited from another round of comments. In the end, the US banks are likely to be the ones to suffer." (IFRA Asia) China will continue to expand the cross-border use of the Chinese currency, the Renminbi or yuan, this year, China's central bank said Friday. The Chinese yuan's cross-border settlement reached 3.64 trillion yuan (596.6 billion U.S.dollars) in the first eleven months of 2013, which was 350 times the amount in 2009, the PBOC said at a work-planning meeting. (Xinhua) Hong Kong needs to deepen its capital markets beyond equities and target growth in areas including fixed income, currencies and commodities if the city is to retain its status as a leading financial center, according to Charles Li, chief executive of the territorys bourse. (WSJ) ASIFMA has an exciting job opportunity available: Analyst - Equities Division to do research and analytical support related to ASIFMAs Equity Division activities and priorities, reporting to the Managing Director, Equities. The successful candidate will join a growing team in Hong Kong. BA degree or above is required, preferably in finance, economics, a related field. Knowledge of (and preferably 1-2 years experience) the capital markets or relevant product areas. Update CHINA Key shadow banking document released Beijing seems to have gotten serious about so-called shadow banking, which has blown up social financing and run against its stated wish of deleveraging the transforming economy. Shadow banking, which broadly refers to financing activities done outside normal banking channels, has been awash in media coverage and research reports for quite some time, but the term is often interpreted in various ways, and Beijing has given no word yet on what it believes the multitrillion-yuan industry really entails. (China Daily) Cash crunch signals policy dilemma for China's reformist Central Bank China's central bank looks set to risk another cash crunch at the end of January, barely a month after the last market squeeze, as policymakers press ahead with a crackdown on shadow financing and other risky bank lending. The People's Bank of China (PBOC) is attempting a delicate balancing act to keep economic growth on track while avoiding a debt-induced financial crisis. (Reuters) Bank of China issues 2.5 bln RMB-Denominated bonds in London Bank of China London Branch issued 2.5 billion RMB-denominated bonds on Wednesday. This issuance marked the first RMB bond issued in the London market by the British branch of a Chinese bank, which will be listed on the London Stock Exchange. The funds raised from the deal will all be retained in London to support further development of the London offshore RMB market as well as Britain-China bilateral trade and investment, the bank said. (Xinhua) Public Announcement of PBC and CBRC [2013] No. 21 This Announcement is made on the following matters to further regulate the risk retention behavior of the originators of credit asset securitization, protect the legitimate rights and interests of investors, and promote the sustainable and sound development of asset securitization business. CBRC issues 'Guidelines for Commercial Banks of Global Systematical Importance Evaluation Index Disclosure' (Chinese Only) The Guidelines require banks, which achieved over RMB 1.6 trillion of adjusted on-and-off-balance-sheet asset balance by the end of last year was, or were recognized as global systemically important banks in the previous year, shall disclose relevant information on global systematical importance evaluation indices, including 12 indicators, such as adjusted on-and-off-balance-sheet asset balance, inter-financial institution asset and liabilities, securities and other financial instruments, payments that are made through payment systems or settled by correspondence banks, assets under custody, securities underwriting amount, OTC derivatives notional amount, tradable and available-for-sale securities, tier 3 assets, cross-border claims and cross-border debt. (NAFMII Newsletter) CBRC stresses prevention against seven major risks in 2014 (Chinese Only) CBRC stressed efforts to effectively guard against and defuse seven potential financial risks when specifying 2014 Banking Supervision priorities. First is to mitigate financing platform loan risks; second is to strictly control real estate loan risks; third is to prevent and mitigate production overcapacity risks; fourth is to prevent risks associated with wealth management, trust, financing guarantee and micro-finance businesses; fifth is to keep close watch on liquidity risks; sixth is to beware of information technology risks; and seventh is to guard against market and operational risks. (NAFMII Newsletter) Shenzhen Government explores cross-border financial service pilot (Chinese Only) Shenzhen Government recently issued 'Several Opinions of Shenzhen Municipal Government on Enabling the Market to Deepen Financial Reform and Innovation'. What is worth noting in the Opinions is the way how cross-border financial services are worded: to launch a pilot program for individual overseas direct investment as soon as possible, and promote experimental work for qualified domestic investors in Qianhai to invest overseas, so as to engage in direct investment, securities investment, derivatives investment and other types of overseas investment. (NAFMII Newsletter) Central settlement launched for RMB interest rate swaps (Chinese Only) Interbank Market Clearing House Co., Ltd. (Shanghai Clearing House) recently launched central settlement for RMB interest rate swaps. According to Xu Zhen, Chairman of the Shanghai Clearing House, more than 90 % of the interest rate swap transactions can be settled centrally and all the existing institutions involving in interest rate swaps are eligible to apply for centralized settlement. (NAFMII Newsletter) Five Chinese companies said on Monday they were postponing initial public offerings (IPOs), in a blow to Beijing's reformist drive to give market forces a 'decisive' role in the country's stock exchanges. The China Securities Regulatory Commission (CSRC) announced in late 2013 that it would move to give investors, not state officials, the primary role in deciding who gets to list and at what price. (Reuters) China Presses Big Banks for More Disclosure China's banking regulator said it has asked the nation's large commercial lenders to disclose their off-balance-sheet exposures, in an effort to align its regulations with international practices. Banks' off-balance-sheet businesses, a major part of China's shadow-lending system, are at the center of concerns over whether the country's slowing economy could trigger a debt crisis. The disclosure requirements could provide a rare peek into those operations. (WSJ) The Shanghai Stock Exchange has set conditions for listed banks to issue bonds on the bourse for the first time, in a move to offer banks a new channel to boost capital. (Reuters) Foreign banks that were lobbied by the Chinese government to open branches in the mainlands first free trade zone in Shanghai have been left with little to do by ambiguous guidance and regulations that have yet to come into force. (SCMP) HONG KONG The United States and Europe are leading the recovery in global economic growth, the heads of banks, corporations and development agencies said at the seventh annual Asian Financial Forum in Hong Kong yesterday. (SCMP) Consultation on establishing an effective resolution regime for financial institutions in Hong Kong launched The Government and the financial regulators, namely the Hong Kong Monetary Authority, the Securities and Futures Commission and the Insurance Authority, today (January 7) launched the first stage of public consultation for three months on establishing an effective resolution regime for financial institutions, including financial market infrastructures, in Hong Kong. Members of the public and the industry are welcome to send their written comments before April 6, 2014. HKMA has issued a circular to remind all authorised institutions of the need to exercise prudent risk management regarding the money laundering and terrorist financing risks associated with virtual commodities. The circular follows recent global attention on virtual commodities such as Bitcoin and their associated money laundering and terrorist financing risks. SFC publishes findings on statutory regime on disclosure of inside information The Securities and Futures Commission (SFC) has published its findings on the statutory regime on disclosure of inside information. It notes that, following the implementation of the regime on 1 January 2013, listed companies have become more vigilant in identifying and disclosing information in a timely manner. PwC Recommends Tax Changes In Hong Kong's 2014/15 Budget With Hong Kong expected to achieve a budget surplus in the current fiscal year, PwC suggests that the implementation of further tax measures to ensure the city's international competitiveness, and to strengthen Hong Kong's leading position as an international financial center, should now be investigated. (Tax News) SINGAPORE Singapore to consider tougher stock market rules Regulators in Singapore are planning to issue a consultation paper that will propose tighter rules for companies looking to list in the city-state, months after the stock exchange was hit by a penny stock scandal. The Monetary Authority of Singapore (MAS) and Singapore Exchange Ltd are exploring various proposals including an independent listing committee to vet some IPO applications, stronger enforcement powers for SGX and tighter rules on stocks that fall below a certain price according to a source familiar with the review. (Reuters) INDIA Outgoing Singh Under Pressure To Deliver On Reform Pledge Announcing his plans to leave the public stage after India?s imminent parliamentary elections, Manmohan Singh, the 81 year old prime minister, insisted he would use the final few months of his tenure to push the countrys stalled economic reform agenda as best he could. 'Reform is not an event, it is a process,' he said on Friday. (FT) RBI fast-tracks bank licensing process The government and the Reserve Bank of India (RBI) are trying to issue the first of the new bank licences by March 31, despite the likely general election in April-May. The process of selecting entities has been put on a fast track, with the screening panel headed by former RBI Governor Bimal Jalan taking all applications for scrutiny at its third meeting on Tuesday. (Business Standard) Reserve Bank of India eases FDI exit rules The Reserve Bank of India has eased rules for foreign direct investment (FDI), allowing exits subject to a lock-in period and without an assured return. This is expected to facilitate greater FDI flow. Till now, a company could only issue equity shares or compulsorily and mandatorily convertible preference shares or debentures as eligible instruments under FDI policy. (Business Standard) RBI eases banks' exposure norms The Reserve Bank of India (RBI) has said banks exposure to qualified central counter-parties for clearing activity (pertaining to derivative products) will be kept outside the ceiling on the permitted amount of loans and credit lines to a single such entity. (Business Standard) Better coordination needed to check ponzi menace: UK Sinha, Sebi chief To ensure that fraudulent money- pooling investment schemes are nipped in the bud, capital markets watchdog Sebi has called for stronger coordination among regulators and law enforcement agencies at the ground level. "One area where lack of coordination (among regulators and other agencies) has been exposed very badly is at the ground level, at the district level, at the state level. This has been exposed by the mushrooming of illegal CIS schemes," Sebi Chairman UK Sinha said. (Economic Times) Securitised debt must be settled via clearing houses: SEBI Investors will have to settle over-the-counter trades in securitised debts through clearing houses, with capital market regulator making it mandatory on Tuesday. Securitised debts are securities issued against underlying debt. Interest earning from the debt is used to service investors holding securities papers. At present, rules require government securities and corporate bonds to be settled through clearing corporations. (Economic Times) Securitised debt trades to be reported within 15 minutes: Sebi Market regulator Sebi today said all trades in securitised debt instruments or certificates will be reported on stock exchanges within 15 minutes of the transaction, a move that will improve transparency. (Economic Times) Sebi issues new norms regarding delivery instruction slips In order to safeguard the interest of the investors, Sebi has put in place a new framework to strengthen the supervisory and monitoring role of depositories and their participants for issuance and processing of Delivery Instruction Slips. A Delivery Instruction Slip (DIS) is used by sellers of securities to instruct their depository participant to debit their demat account. (Economic Times) JAPAN Takenaka Sees Japan Deregulation Pushing Nikkei Past 18,000 Japanese stocks could surpass a level not seen since 2007 if the government pushes through in its drive to loosen business regulations, said Heizo Takenaka, a member of a government council on special economic zones. 'Stocks have surged considerably but they can still improve if policies are implemented properly,' (Bloomberg) BOJ Shirai Sees High Uncertainty Over 2% Inflation in 2 Years Bank of Japan board member Sayuri Shirai repeated her warning that it is highly uncertain whether the BOJ can hit its 2% inflation target in about two years, saying it takes time for its aggressive easing to have full effects on the economy. "I personally consider that it may take some time before the full impact of QQE (quantitative and qualitative monetary easing) materializes," Shirai said in a speech on central banks' challenges in a rapidly changing global economic environment at the Monetary Authority of Singapore on Tuesday. (MNI News) SOUTH KOREA "No More Downside Risk from Tapering"...BOK Governor Kim Choong-soo, Bank of Korea governor, said in a press conference held after the regular Monetary Policy Committee meeting on January 9, "Tapering [of quantitative easing policies by U.S. monetary authorities] is not a bad thing for us as it means recovery of the U.S. economy. Although we considered the tapering a downside risk in our previous monetary policy statements, this time around it's become more positive." (Hankyang) Bank of Korea Holds Rate Even as Yen Clouds Export Outlook The Bank of Korea kept its benchmark interest rate unchanged for an eighth straight month, even as a weak yen clouds the outlook for exporters competing with Japanese companies. Governor Kim Choong Soo and his board held the seven-day repurchase rate at 2.5 percent after a cut in May, the central bank said in a statement in Seoul today. (Bloomberg) Korea Exchange Considers Longer Hours While Mulling Acquisitions South Koreas bourse operator may extend trading hours for Asias fourth-biggest equity market and will consider overseas acquisitions after local trading volumes slumped to a six-year low. Korea Exchange plans to extend trading hours after the official close and may lengthen its six-hour regular trading day within five years to boost liquidity in the $1.2 trillion market, according to its first development plan since Choi Kyung Soo took over as chairman in October. (Bloomberg) THAILAND MPC may lower growth forecast The Bank of Thailand's Monetary Policy Committee (MPC) may cut this year's 4% GDP growth forecast, as downside risk is increasing on the back of the political turmoil. "The MPC will assess domestic factors such as public expenditure, exports and private spending in evaluating its economic growth forecast," said central bank spokeswoman Roong Mallikamas. (Bangkok Post) PHILIPPINES Philippines Adds to Record Sovereign Debt Sales in Asia The Philippines sold $1.5 billion of bonds, adding to the busiest week for Asian sovereigns on record as slowing U.S. stimulus threatens to increase funding costs. The nation, Southeast Asias fastest-growing economy, sold 10-year bonds to yield 4.2 percent, according to data compiled by Bloomberg. (Bloomberg) VIETNAM Vietnam Grapples with Fraud Risk in State Firm Clean-Up Vietnam is seeking to deter fraud as it considers a plan that allows state-owned enterprises to sell stakes below book value, part of efforts to accelerate a cleanup of the sector and regain investor confidence. 'Selling stakes below book value is necessary to quicken the restructuring process of state companies,' Nguyen Duc Kien, deputy head of the National Assemblys Economic Committee, said in an interview yesterday. (Bloomberg) MYANMAR ASEAN Chairmanship Offers Opportunity for Myanmar On January 1, Myanmar assumed the chairmanship of the Association of Southeast Asian Nations (ASEAN). In 1997, when Myanmar joined ASEAN, the countrys membership was met with stiff resistance because of its abhorrent human rights record under an oppressive military dictatorship. In 2006, Myanmar was encouraged to forfeit its chairmanship by ASEAN out of fear that the United States and other western nations would boycott the ASEAN Regional Forum (ARF), and the bad publicity this would garner. (Asia Foundation) INTERNATIONAL Regulators look at compiling list of key asset managers Regulators are looking at compiling a list of the worlds biggest asset management groups that pose a threat to the financial system in the event of their collapse. The Financial Stability Board and the International Organisation of Securities Commissions signalled in a consultative paper on Wednesday that asset management groups with more than $100bn under management would be included in the list. Investors said the groups on the list would be likely to face stricter capital and reporting requirements. (FT) Basel Committee sets out amended leverage ratio framework and disclosure requirements The Basel Committee has published the full text of the Basel III leverage ratio framework and disclosure requirements following endorsement by its governing body, the Group of Central Bank Governors and Heads of Supervision (GHOS). A consultative version of the leverage ratio framework and disclosure requirements was published in June 2013. Basel Committee issues LCR disclosure standards and guidance on market-based indicators of liquidity The Basel Committee has issued its final requirements for banks' Liquidity Coverage Ratio (LCR) related disclosures. These requirements are intended to improve the transparency of regulatory liquidity requirements and enhance market discipline. Consistent with the Basel III agreement, national authorities will give effect to these disclosure requirements, and banks will be required to comply with them, from the date of the first reporting period after 1 January 2015. IMF to raise its global growth forecast The International Monetary Fund will raise its forecast for global growth according to its managing director, Christine Lagarde. She said the revision would come in the next three weeks but did not elaborate, saying that it would be premature to say any more. (BBC) FSB - IOSCO Consultative Document: Assessment Methodologies for Identifying Non-Bank Non-Insurer Global Systemically Important Financial Institutions This document sets out, for public consultation, the proposed assessment methodologies for identifying NBNI G-SIFIs, extending the SIFI framework that currently covers banks and insurers to all other financial institutions. This is challenging as the high-level framework and specific methodologies have to capture a wide range of business models and risk profiles, while maintaining broad consistency with the methodologies for banks and insurers. OECD publishes working paper on state of banking sector in Europe The findings presented in the paper provide prima facie evidence of a credit crunch in Europe. According to the authors, another fallout of the financial crisis is an increase, though very modest, of concentration in banking in the distressed countries (Greece, Ireland, Portugal, Spain and Italy). The paper notes that the enhancement of financial stability through (forced) M&As seems to come at the expense of reduced competition. Regulatory Oversight Committee Endorsement Note - Dutch Chamber of Commerce (KvK) and the National Board of Patents and Registration of Finland (PRH) As of the date of this endorsement, all certified codes issued by these pre-LOUs will be globally recognized by the ROC for reporting purposes, including those issued through self-registration and assisted registration with the explicit permission of the registrant. UNITED STATES The Federal Reserve is investigating whether traders at the worlds biggest banks rigged benchmark currency rates, raising the risk that firms will be penalized for lax controls as regulators look for wrongdoing. (Bloomberg) The US should re-examine oversight of the $4tn municipal bond market, where states and municipalities raise money, according to a task force co-chaired by Paul Volcker, former Federal Reserve chairman. (FT) House Financial Services Chairman to Seek Volcker Rule Change Representative Jeb Hensarling, a Republican of Texas and chairman of the House Financial Services Committee, is expected to propose a bill that could open up a huge loophole in the rule. The proposed change could allow banks to create and own securities with many types of investments that are barred under the Volcker Rule, which is intended to prohibit speculative trading by banks while letting them both make markets for customers and hedge other investments. (NY Times) Congress Negotiators Near Funding Accord Before Deadline Congressional negotiators are working to settle final sticking points over military and health-care spending in a plan to finance the U.S. government and avoid a second shutdown in four months. (Bloomberg) Office of Financial Research report highlights threats to stability The Treasury Department's recently released Annual Report of the Office of Financial Research addresses several important areas, including potential threats to the nation's financial stability. The office's efforts to promote financial data standards are also discussed. (Wall Street & Tech) EUROPE EU to Seek Deal Next Week on Overhaul of Financial-Market Rules European Union lawmakers and national officials will make a renewed attempt next week to clinch a deal to overhaul the blocs financial-market rulebook. Unresolved issues include to what extent the revamped law should cover trading in derivatives linked to energy markets and what investor protection rules should be included, said Sven Giegold, a German lawmaker representing the European Parliaments Green group in the talks. (Bloomberg) ESMA has published a letter, dated 16 December 2013, in which its Chair urges the EU Commission to ensure that ESMA has sufficient time to draft the regulatory technical standards on prospectus related issues it is required to prepare under the proposed Omnibus II Directive. Germany?s candidate for a seat on the European Central Bank Executive Board, Sabine Lautenschlaeger, signaled support for a centralized agency to deal with failing euro-area banks, while saying not all lenders may need to contribute to a common resolution fund. ?Having banking supervision on a European level, you need to have a resolution mechanism on a European level, too,? Lautenschlaeger said. (Bloomberg) Fund managers, banks, investors and corporations trading in Europe are struggling to meet a deadline in five weeks time for mandatory reporting of all their trades to regulators. (FT) |
Monday, January 20, 2014
ASIFMA - 07 - 14 JANUARY 2014 | Issue 186
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