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15 - 22 April
2014 | Issue 200
Through-train
scheme brings mixed blessings for industry players
Nick Ronalds: "The new trading link has something for everybody. Hong
Kong's status as the gateway to China is reinforced, and Hong Kong
investors get access to Chinese stocks. The Shanghai stock exchange and
mainland brokers acquire a large new pool of relatively sophisticated
customers. Chinese investors get access to what's practically a new asset
class, enabling them to diversify their portfolios and improve performance.
It's a big win all around." (SCMP)
APEC: Asia Region
Funds Passport
The passport working group (Australia, Korea, New Zealand, the Philippines,
Singapore and Thailand) has released a consultation paper to seek views
from the public on the details of the proposed arrangements. This follows
the signing of a statement of intent on the passport by representatives
from Australia, Korea, New Zealand and Singapore in September 2013,
committing to jointly issuing such a paper. Consultation closes on 11 July
2014.
CHINA
China's top legislature is
considering giving a greenlight to bond sales by provincial-level
governments, under strict conditions. A draft revision to the country's
budget law tabled for the third reading at the bimonthly session of the
National People's Congress (NPC) Standing Committee, proposes that
authorized provincial-level governments will be able to issue bonds within
a quota set by the State Council, China's cabinet, and approved by the NPC
or its standing committee. (Xinhua)
A draft revision to China's
budget law, tabled for the third reading at a bimonthly session of China's
top legislature on Monday, aims to forge a fully regulated and transparent
budget system by expanding public access. The 94-page draft revision,
submitted to the eighth session of the 12th National People's Congress
Standing Committee, proposes that governments must make public their budget
plans and adjustments, final accounts and budgetary performance reports
within 20 days after they are approved by people's congresses and their
standing committees at corresponding levels. (Xinhua)
China's commercial banks need
to improve their business differentiation and services for local residents
and small firms, China's commercial banks have a similar business model and
lack unique business features," Yi, vice governor of the People's Bank
of China (PBoC), said at a forum hosted by Peking University. (Shanghai
Daily)
China's banking regulator has
asked trust companies to strengthen risk management, underlining the
responsibility of shareholders and forbidding shadow banking business.
Trust companies are required to implement comprehensive risk control in
product design, risk supervision and information disclosure, according to a
guideline released by the China Banking Regulatory Commission (CBRC).
(Xinhua)
The fast development of
internet finance in China is driving an increase in cases of illegal fund
raising, a situation that could worsen if regulation does not catch up, a
senior official at the country's banking sector watchdog said. (Reuters)
China announces
preliminary IPO list
China's securities regulator unveiled a short list of companies applying
for listing in the small hours of Saturday, signaling a restart of the
initial public offering (IPO) review that has been suspended for over a
year. A total of 28 companies appeared on the list, 16 for the main board
of Shanghai Stock Exchange, 4 for small and medium-sized enterprises board
in Shenzhen and 8 for the ChiNext Board, data from China Securities
Regulatory Commission (CSRC) showed. (Xinhua)
CSRC adjusts
internal structure and functions
CSRC has recently completed adjustment of internal structure and its
functions. Bond Supervision Department undertakes the function of
regulation on asset securitization, taking the role again as regulator of
financing instruments. For one thing, it rectifies the misplacement of
financial institution as main regulator; for another, it allows asset
securitization to be treated as a fixed income product, laying foundation
for its approval mechanism to transit from special approval to filing
system in the future. (NAFMII Newsletter)
Multinational firms are
planning to invest less in China because of market access barriers and
slowing growth in the world's second-largest economy, a U.S. business lobby
said. China's economy expanded 7.4 percent year-on-year in the
January-March quarter, its slowest pace in 18 months. Concerns over market
access and slower growth are greater this year than they were in the past,
the American Chamber of Commerce in China said in its annual report on the
business climate in China. (Reuters)
China-EU
investment decline is temporary not trend
The shrinkage in investment between China and the European Union (EU) in
the first quarter of 2014 is temporary rather than a trend, and the
prospects for their economic cooperation are bright, said a Ministry of
Commerce spokesman on Thursday. Shen Danyang made the remarks at a news
briefing, adding that China attaches great importance to China-EU economic
cooperation. (Xinhua)
HONG
KONG
HKMA Annual
Report 2013
The Hong Kong Monetary Authority (HKMA) today (Wednesday) published its
Annual Report for 2013 including the financial statements of the Exchange
Fund. The Report reviews trends and events in monetary and banking affairs,
and reports on the HKMA's work during 2013. It also sets out the HKMA's
plans for 2014.
Opening remarks at the HKMA-BNM
Joint Conference on Islamic Finance
By Peter Pang, Deputy Chief Executive, Hong Kong Monetary Authority
FSTB: Bill to establish
independent Insurance Authority to be gazetted
The Financial Services and the Treasury Bureau (FSTB) has announced that
the Insurance Companies (Amendment) Bill 2014 will be gazetted on 25 April
2014. The Bill provides for a legal framework for establishing an
independent Insurance Authority (IIA) and a statutory licensing regime for
insurance intermediaries. The Bill will be presented to the Legislative
Council for first reading on 30 April 2014.
INDIA
The Reserve Bank of India
(RBI) will explain to the new government the need to keep inflation under
control and why keeping interest rates relatively high may be unavoidable
to achieve that, government officials familiar with RBI's thinking said.
Further, RBI, which is in the process of formulating new guidelines for
bank licences, was unlikely to allow corporate houses to set up new banks
in the near future, the officials said. (Economic Times)
The Reserve Bank of India
(RBI) is discussing ways to ensure an orderly rollout of its unpopular
proposal to price state government debt at market-based valuations to
minimize potential losses for banks holding this debt, three officials
familiar with the discussions told Reuters. Holders of state debt - which
are largely made up of banks - could be pushed to mark them to market
prices in several stages as opposed to in one go, the officials said,
although they noted RBI has not yet decided whether it will implement the
proposal. (Live Mint)
SEBI Report of
the Working Group on Resolution Regime for Financial Institutions
The Report is organized into five chapters. Introduction, the global
initiatives and international practices in relation to implementation of
Key Attributes, the Key Attributes and also identifies the current gaps
vis-a-vis the Key Attributes in the Indian resolution framework for all
financial institutions, the institutional arrangements, design,
coordination and preparedness that are necessary for orderly resolution of
financial institutions in India and the requirements for legal framework
conditions for cross-border cooperation, information sharing,
institution-specific cross-border cooperation agreements and crisis
management groups.
JAPAN
Japan's trade deficit
quadrupled in March as export growth slowed and energy imports continued to
rise. A weak Japanese currency, which pushed up the cost of imports, also
contributed to the widening gap. (BBC)
Japan
could cut its corporate tax rate as early as next fiscal year by 2 to 3
percentage points, gradually lowering the levy toward 25 percent in later
years to boost the nation's competitiveness, a tax panel member said.
(Bloomberg)
AUSTRALIA
ASIC today released Report
390 Review of OTC electricity derivatives market participants' risk
management policies (REP 390). REP 390 summarises the findings of our
review of the written risk management policies of Australian financial
services (AFS) licensed entities that trade in over-the-counter (OTC)
derivatives in the wholesale electricity market in Australia.
Big four dilemma
looms but failure is not an option
In Australia, amid mounting rumours of a run on a second-tier bank, the
Rudd government moved quickly to guarantee all bank deposits up to $1
million. It was enough to stem any panic - and cost taxpayers nothing. The
guarantee still stands for deposits up to $250,000. But it is not clear how
it would be funded should it be needed. (The Sydney Morning Herald)
SOUTH
KOREA
The FSC approved a draft
regulation on Supervision of Covered Bond Issuance, completing a legal
framework for covered bond issuance. The Regulation on Supervision of
Covered Bond Issuance is enacted to stipulate further details mandated by
the Covered Bond Act and its Enforcement Decree.
THAILAND
The Stock Exchange of
Thailand (SET) and Deutsche Borse AG signed a Memorandum
of Understanding (MoU) on 11 April 2014. Both partners aim to enter into a
cooperative relationship for the purpose of facilitating the development of
the securities and derivatives markets between Thailand and Germany.
VIETNAM
Vietnam's state asset
management company aims to start selling bad debt from banks in the third
quarter, stepping up efforts to overhaul lenders and spur economic growth.
(Bloomberg)
PHILIPPINES
The country's biggest banks
will soon have to put up more money as buffer for possible losses, in line
with international regulations that seek to curb excessive risk-taking by lenders
deemed "too big to fail." Bangko Sentral ng Pilipinas (BSP)
Assistant Governor Johnny Noe E. Ravalo said that new rules covering
"systemically important financial institutions" were ready for
the Monetary Board's approval and would be issued "soon."
(Inquirer)
INTERNATIONAL
FSB publishes
public responses to the February 2014 consultative document
Feasibility study on approaches to aggregate OTC derivatives trade
repository data. The paper set out and analysed the various options for
aggregating OTC derivatives TR data and examined the three broad types of
model for an aggregation mechanism. Interested parties were invited to provide
written comments by 28 February 2014. These comments are available.
To promote consistent global
implementation of those requirements, the Committee has agreed to
periodically review frequently asked questions and publish answers along
with any technical elaboration of the rules text and interpretative
guidance that may be necessary.
IOSCO publishes research paper on
corporate bond markets
IOSCO has published a staff working paper entitled 'Corporate Bond Markets:
A Global Perspective', which presents the findings from a study on the
development and functioning of corporate bond markets globally. The
findings underscore the importance of corporate bond markets to economic
growth, financial stability and economic recovery. The paper is the first
in a three volume series. Volume II (emerging markets) and Volume III
(developed markets) will provide more granular country-by-country data and
analysis, in recognition of the diversity within the different regions.
UNITED STATES
U.S. SEC releases
cyber security examination blueprint
U.S. securities regulators have unveiled a road map that lays out how they
plan to make sure Wall Street firms are prepared to detect and prevent
cyber security attacks. The nine-page document, posted April 15, contains
examples of the questions Securities and Exchange Commission examiners
might ask brokerages and asset managers during inspections. (Reuters)
US regulators to
monitor London over-the-counter swaps
Part of London's lucrative over-the-counter swaps market is set to come
under direct US regulatory oversight as dealers in the UK capital wrestle
with meeting tighter rules for overseas swaps dealers accessing US markets.
ICAP, the world's largest interdealer broker, will next month begin trading
US dollar-denominated swaps from its London home on a new US-regulated
electronic marketplace. (FT)
Obama's Asia Trip and U.S.
Credibility
U.S. President Barack Obama's visit to Asia comes amid rising regional
tensions and increasing questions about the direction of U.S. policy.
Although he will make stops only in Japan, South Korea, Malaysia and the
Philippines, the impact of his trip will reverberate throughout the entire
Asia-Pacific. (WSJ)
EUROPE
Esma chief warns
securities regulators on monitoring risk
Securities watchdogs have inadequate resources to cope with their new
regulatory responsibility for monitoring systemic risk, the EU's top
markets regulator has warned. Steven Maijoor, chairman of the European
Securities and Markets Authority , said legislation passed last week by the
European parliament amounted to the "biggest overhaul of the capital
markets in a generation" - but warned that the authorities had a long
way to go before putting the regime into practice. (FT)
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