Asia Regulatory Review | 04 - 11 March 2014

4 - 11 March 2014 | Issue 194 Spotlight China Expects Full Interest-Rate Liberalization Within 2 Years China's central bank chief, Zhou Xiaochuan, said he expects to see full liberalization of domestic interest rates, a key step in the nation's ambitious financial reforms, in a year or two. The governor of the People's Bank of China also said there was no timetable for making the yuan an international currency and that much work still remains to be done. (WSJ) ASIFMA's 4th Offshore RMB Markets Conference ASIFMA is pleased to present the 4th Offshore RMB Markets Conference in Singapore on Thursday, 13 March 2014. The conference is an industry-wide event for both sell-side and buy-side, bringing together high-level regulators, policy makers, ASIFMA members and their guests, to discuss key developments, trends and issues for offshore RMB markets. Update CHINA China to launch private bank pilot program China will launch pilot programs testing the development of privately owned banks in Tianjin, Shanghai, Zhejiang and Guangdong, the country's bank regulator Shang Fulin said on Tuesday. The pilot, which was approved by China's government in January, is the first tentative step by the country to open its hitherto closely guarded banking sector to private investors. (Reuters) China to free deposit rates in coming one or two years China is very likely to ease its grip on banks' deposit rate in the coming one or two years, central bank governor Zhou Xiaochuan said on Tuesday. Zhou made the remarks at a press conference on the sidelines of the National People's Congress, China's top legislature. (Xinhua) IPO reform may take time: CSRC chairman A registration system for issuing IPOs in China is unlikely to be launched in 2014, as the modification process of the current Securities Law may need more time, said Xiao Gang, chairman of China Securities Regulatory Commission, on Wednesday. (ecns) Implementation Rules for Foreign Exchange Management of Shanghai FTZ issued (Chinese Only) PBC issued 'Notice on Implementation Rules for Foreign Exchange Management of Shanghai Pilot Free Trade Zone', which includes the following new measures: it simplifies FX sale and purchase documents check under current accounts as well as FX registration procedures for direct investment, allowing foreign-invested enterprises to settle their Non-RMB capital fund at their will; it removes administrative approval for external guarantee and guarantee fee paid to overseas business, lifts the ceiling for overseas foreign exchange loan by enterprises within FTZ, and abolishes debt approval for overseas financial leasing, allowing domestic financial leasing businesses to receive rents in foreign currency; it improves pilot policies on MNC headquarters centralized operation and management of foreign exchange funds, foreign currency cash pool and FX management of international trade settlement center, relaxing pilot enterprises conditions and streamlining approval process and account management; it improves management on FX sale and purchase and facilitates banks within FTZ to carry out OTC commodity derivatives targeted at customers within FTZ. (NAFMII Newsletter) China confident over international trade target: minister Chinese Minister of Commerce Gao Hucheng said Friday that China is confident of achieving its 7.5-percent growth target in foreign trade this year, with an improving global economic environment and competitiveness among domestic enterprises. "International demand will rise slowly as the global economy has kept recovering, especially that of developed countries," said Gao at a press conference on the sidelines of the ongoing annual session of the National People's Congress, China's top legislature. (Xinhua) Shanghai Chaori in Default on Bond Interest Payments A Chinese solar-equipment maker on Friday failed to meet interest payments on a bond, according to a company official there, becoming China's first domestic corporate bond default. (WSJ) HONG KONG Foreign Exchange Accumulators (FX accumulators) and Non-leveraged Renminbi (RMB)-Linked Deposits HKMA has issued a circular to authorised institutions to provide guidance and clarification on the regulatory requirements governing the sale of foreign exchange accumulators and non-leveraged renminbi (RMB)-linked deposits by authorised institutions. TAIWAN Taiwanese Banks Feel China's Squeeze Chinese companies searching for cheap cash have been turning to Taiwan's banks, long the flush lenders in Asia, sending borrowing costs on the island surging to their highest levels in three years. (WSJ) AUSTRALIA Australian economy expands 0.8% in third quarter Australia has reported slightly better-than-expected growth for the last quarter of 2013, boosted by exports and domestic consumption. Official figures show gross domestic product (GDP) grew 0.8% in the three months to December. (BBC) RBAs Stevens Says He Does not See Need to Reduce Rates Further Australia's central bank Governor Glenn Stevens said he's not sure how long a flagged period of interest-rate stability will last and does not see the need to further loosen 'very accommodative' policy at the moment. 'I have not said how long a period because I do not know,' Stevens told a parliamentary panel in Sydney. (Bloomberg) JAPAN BOJ keeps stimulus in place, downgrades exports in warning sign The Bank of Japan maintained its massive monetary stimulus on Tuesday on the view that growth in the economy and consumer prices remains on track, but it downgraded its view of exports in a warning that external demand will continue to disappoint. The BOJ did upgrade its view of capital expenditure and turn more optimistic about industrial production, showing more confidence in domestic demand before a sales tax increase scheduled for April 1. (Reuters) U.S. readies for more 'extremely tough' trade talks with Japan The United States is finding talks with Japan on opening its agricultural market "extremely tough", a senior U.S. trade official said on Friday, as the two countries prepared for another round of bilateral negotiations. (Reuters) INDIA Fully committed to reforms in OTC derivatives: RBI The Reserve Bank on Thursday said India is fully committed to bring in reforms in the over-the-counter (OTC) derivatives markets, but its pace and nature will depend on the domestic market conditions. "India is committed to adopting OTC derivatives reforms. However, the pace and scope of reform implementation depend on the domestic market conditions and characteristics," it said in a report on 'OTC Derivatives Market Reforms'. (Business Today) India to Issue New Bank Licenses in a Few Weeks India's central bank expects to issue new bank licenses in a few weeks once it has received the approval of the Election Commission, Governor Raghuram Rajan said Friday. "My sense is (that) if all goes well, we should be able to do (so) in the next few weeks," Mr. Rajan said after attending a board meeting of the central bank.(WSJ) Facts and figures for India 2014 general election Voting for the 2014 general election will begin on April 7, the Election Commission said on Wednesday. More than 814 million people -a number larger than the population of Europe - will be eligible to vote in the worlds biggest democratic exercise. (Reuters) Indian IT companies share solutions with Indonesian financial sector Top Indian IT solutions companies shared their technical knowhow and services solution perspectives with the Indonesian banking and financial sectors to promote enhanced cooperation in this field between the two countries. (Business Standard) SOUTH KOREA Bank of Korea and Bank Indonesia sign bilateral local currency swap arrangement The Bank of Korea and the Bank Indonesia have signed an agreement to establish a bilateral local currency swap arrangement. The arrangement allows for the exchange of local currencies between the two central banks of up to KRW 10.7 trillion or IDR 115 trillion. The facility will be effective for a period of three years, and could be extended by mutual consent of both sides. Canada, South Korea Trade Deal Expected Within a Week Canada and South Korea are close to reaching a free-trade deal, almost nine years after negotiations started and two years after a U.S. deal with Seoul took effect, according to people familiar with the matter. An agreement could be announced within a week, the people said. (WSJ) INTERNATIONAL IOSCO consults on prudential standards in securities sector The report seeks to highlight similarities, differences and gaps among the different frameworks. IOSCO's objective is to update its 1989 Report on Capital Adequacy Standards for Securities Firms based on the issues identified in the consultation report. The report's comparative analysis focuses on the net capital rule (NCR) approach, in particular the US approaches, and the Capital Requirements Directive (CRD), which is founded on the Basel Committee approach. Comments are due by 10 June 2014. BIS Quarterly Review, March 2014 The BIS Quarterly Review for March 2014 says emerging economies adjust under market pressure. UNITED STATES White House has optimistic growth forecast for 2014, 2015 Under a White House projection, the U.S. economy is expected to expand by 3.1 percent this year, faster than last year's 1.7 percent. Growth would pick up to 3.4 percent in 2015, the White House said. The administration also forecast that unemployment would ease to an average of 6.9 percent in 2014. The jobless rate, which reached a high of 10 percent in 2009, fell to a five-year low of 6.6 percent in January. (Reuters) SEC IA Exams Chief: Small Firms Won't Get Cyber Security Rules Exemptions Small firms won't get a pass on cyber security rules, Securities and Exchange Commission Investment Adviser/Investment Company Examination Program chief Jane Jarcho said Friday. As these regulations are developed by the Office of Compliance Inspections and Examinations, Jarcho said, the working hypothesis is large firms are taking cyber security more seriously than small advisory businesses. She added that theory had yet to be proven. (FA Mag) EUROPE Draghi Says Deflation Danger Should Abate as Economy Revives European Central Bank President Mario signaled that deflation risks in the euro region are easing for now after new forecasts showed that inflation will approach their target by the end of 2016. (Bloomberg) Europe inches closer to deal on bank resolution, more talks ahead Euro zone governments edged closer on Monday towards a deal on how to wind down failing banks, but reached no conclusions and more negotiations will take place on Tuesday to address demands of the European Parliament. Negotiations are set to last until Wednesday and may be the final step in a European banking union that would mean one supervisor for euro zone banks, one set of rules to close or restructure those in trouble and one pot of money to pay for it. (Reuters) Bank of England's Carney faces grilling over foreign exchange scandal Mark Carney faces probably his toughest questioning so far as Bank of England governor on Tuesday when lawmakers will seize on a foreign exchange scandal to press their demands for tighter oversight of the central bank. (Reuters)