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01 - 08 April
2014 | Issue 198
China regulator
to run stress tests on banks
The China Banking Regulatory Commission (CBRC) has said it will conduct
regional and national stress tests after banks saw a spike in bad loans
last year, the Shanghai Securities News reported on Friday, reflecting
growing creditworthiness concerns. (Reuters)
"The Amendment Ordinance
mainly aims to provide for a regulatory framework for the over-the-counter
derivative market in Hong Kong which meets the relevant commitments of the
Group of Twenty (G20) and is in line with developments in other
international financial centres," a government spokesman said.
CHINA
China fast
forwards infrastructure plans to boost growth
China's Premier Li Keqiang pledged to speed up construction of railways and
housing for the poor this year to prop up flagging growth and reassure
domestic and international investors that Beijing will not allow the
economy to slow too much. (FT)
The People's Bank of China is
facing a wall of criticism as it pushes through market reforms such as a
more flexible exchange rate, a senior central bank official said in
comments published Tuesday. PBOC Vice-Governor Yi Gang was quoted by
sina.com as saying that his office has been inundated with complaints about
the exchange rate, even though the PBOC move to increase flexibility was
flagged well in advance. (MNI)
China Cash
Shortage Brings IOUs to Fore
In China's economic slowdown, businesses are having troubles paying suppliers,
and banks are getting shy about lending, so cash is scarce. The notes - a
form of IOUs known as acceptance drafts - are increasingly being used
instead, and Mr. Xie says they really get around. (FT)
Cabinet backs
self-regulation of online financial industry
The China Banking Regulatory Commission will be mostly responsible for
regulating peer-to-peer lending and the central bank will regulate
third-party payment services, Yang Xiaojun, the CBRC's deputy director of
the supervisory cooperation department for banking innovation, said.
Crowdfunding is likely to be regulated by the China Securities Regulatory
Commission and the China Insurance Regulatory Commission will likely
regulate Web sales of insurace, Yang said. (Ecns)
The
Shanghai Stock Exchange, fearful of losing ground to exchanges both at home
and abroad, said it is considering the creation of a new board to host the
initial public offerings of fast-growing technology companies. The move
comes as high fliers like Alibaba, Weibo and JD.com are looking to US markets
to raise funds and as the Nasdaq-style ChiNext board in Shenzhen helps
propel the southern exchange to higher prominence over Shanghai. (Shanghai
Daily)
HONG
KONG
The key question is then:
what are the core values of Hong Kong? Can we maintain Hong Kong’s
long-term competitive advantage while insisting on those values?
The latest version of the
"through train" scheme - Beijing's plan to let mainlanders trade
directly in Hong Kong stocks - is back on track. But unlike the last
proposal in 2007, which would have benefited local brokers, this year's
version seems to benefit mainland brokers more. (SCMP)
SINGAPORE
Singapore
Exchange is pleased to launch the clearing of Non-Deliverable Interest Rate
Swaps in Malaysian Ringgit and Thai Baht on 7 April 2014. This new asset
class, which will be settled in US dollars, further augments SGX's current
suite of Over-the-Counter Financials clearing which includes Interest Rate
Swaps in Singapore Dollar and US Dollar and Non-Deliverable Forwards in
seven Asian currencies.
INDIA
Indians have voted in the
first phase of a general election which pits the governing Congress party
against the Hindu nationalist BJP opposition. The nine-phase vote got under
way in the north-eastern states of Assam and Tripura and will conclude on
12 May. Votes will be counted on 16 May. (BBC)
Foreign banks will have to
operate as wholly-owned units for better regulatory control, says Raghuram
Rajan. (Business Standard)
RBI decides to
grant "in-principle" approval for banking licences
The Reserve Bank of India (RBI) has decided today to grant
"in-principle" approval to two applicants viz., IDFC Limited and
Bandhan Financial Services Private Limited, to set up banks under the
Guidelines on Licensing of New Banks in the Private Sector issued on
February 22, 2013.
India's
market regulator on Monday partially reversed curbs on dollar-rupee forward
contracts that were imposed last year after the rupee hit record lows. The
Securities and Exchange Board of India (SEBI) had doubled the margin
requirement on the domestic dollar-rupee forward trades last year in a bid
to arrest the steep decline of the rupee. (Business Times)
JAPAN
The Bank of Japan refrained
from adding extra stimulus as policy makers said the world's third-biggest
economy can maintain a recovery even with last week's increase in the sales
tax. (Bloomberg)
AUSTRALIA
Diplomacy weighs
on Tony Abbott's Asia trade mission
It was either an ambitious statement of intent or a blunder that will make
Tony Abbott, Australia's prime minister, a hostage to the vagaries of Asian
politics. His post-election pledge last September to sign free trade deals
with Japan, South Korea and China in 2014 will be tested this week as he
leads Australia's largest-ever trade mission to a region beset with
historical rivalries. (FT)
Reserve Bank of
Australia Submission to the Financial System Inquiry
This Submission outlines developments in the Australian financial system in
the 17 year period since the Wallis Inquiry, exploring in more detail those
that the Reserve Bank considers have had the largest influence in shaping
the system. In keeping with the Reserve Bank's responsibilities, a
system-wide perspective is adopted in the Submission. Areas where the
Reserve Bank was given an explicit mandate following the Wallis Inquiry,
particularly the oversight of payment and settlement issues, are examined
in some detail
Report on the
Australian OTC Derivatives Market - April 2014
The Reserve Bank of Australia, Australian Prudential Regulation Authority,
and Australian Securities and Investments Commission (the Regulators) are
today releasing a Report on the Australian OTC Derivatives Market - April
2014. This report constitutes the latest advice from the Regulators to the
Minister on mandatory requirements for central clearing, platform trading
and trade reporting of over-the-counter (OTC) derivatives.
The
Australian Securities and Investments Commission has threatened to
introduce clamps on super-fast computer trades to reduce their speed if the
controversial practice continues unchecked. (Financial Review)
SOUTH
KOREA
Korea, UK to enhance bilateral
cooperation in financial sector
Senior financial officials from South Korea and the United Kingdom gathered
in London Tuesday to strengthen the two countries' financial ties. Chaired
by the chief of Korea's Financial Services Commission, Shin Je-yoon, and
Lord Mayor of the City of London Fiona Woolf, officials from Seoul also
suggested channeling loans from international financial institutions to
help North Korea prepping for reunification in the future. (Arirang)
THAILAND
First-half economic growth
may stagnate or decline from last year's fourth quarter on the slowdown in
domestic economic activity, says a senior Bank of Thailand (BoT)
official. (Bangkok Post)
INTERNATIONAL
It focuses on the status of
domestic rule-making processes to ensure that the Committee's capital
standards are transformed into national law or regulation according to the
internationally agreed timeframes. The Committee believes that disclosure
will provide additional incentive for members to fully comply with the
international agreements.
The People's Bank of China
and the Bank for International Settlements co-hosted a research conference
on "Globalisation and Inflation Dynamics in Asia and the Pacific"
on 23-24 September 2013 in Beijing. This was the wrap-up conference for the
BIS Asian Office's two-year research programme on globalisation and
inflation that was launched by the Asian Consultative Council in February
2012.
OTC Derivatives
Regulators Issue Report to the G20
The Over-the-Counter (OTC) Derivatives Regulators Group (ODRG), which is
made up of authorities with responsibility for the regulation of OTC
derivatives markets in Australia, Brazil, the European Union, Hong Kong,
Japan, Ontario, Quebec, Singapore, Switzerland, and the United States,
issued a report today that identifies the current list of remaining
cross-border implementation issues related to global reform of OTC
derivatives markets. The report also includes a summary of the status of
such issues and a timetable for addressing them through a series of reports
to the G20 Finance Ministers and Central Bank Governors over the course of
2014.
UNITED
STATES
The Federal Reserve is giving
banks an additional two years to comply with Volcker Rule standards for
treatment of collateralized loan obligations after industry complaints that
the requirements would lead to big losses. (Bloomberg)
CFTC nears
cross-border clearing framework
The framework would give clearing houses outside of the US a set of
thresholds to reach that would allow the firms to substitute home country
compliance for CFTC compliance. This would allow the firms to avoid onerous
registration and reporting requirements. (IFR)
The
Justice Department is investigating high-speed trading practices to
determine whether they violate insider-trading laws, Attorney General Eric
Holder told lawmakers Friday. Mr. Holder said the practice has
"rightly received scrutiny from regulators." (WSJ)
EUROPE
EU Bank-Structure
Rule Hits Opposition From Ministers
The European Union's bid to set out structure rules for about 30 of the
bloc's largest banks hit an early stumbling block as finance ministers
challenged aspects of the plans that they said could harm lending to
businesses. Germany, France, Sweden, Poland and the Czech Republic were
among countries to take issue with parts of the blueprint, according to two
officials familiar with discussions that took place in Athens today. The
debate showed the challenges facing Michel Barnier, the EU's
financial-services chief, as he pushes the plan forward. (Bloomberg)
The European Securities and
Markets Authority (ESMA) has updated its list of Central Counterparties
(CCPs) that have been authorised to offer services and activities in the
Union in accordance with the European Markets Infrastructure Regulation
EMIR (EMIR). There are currently two CCPs authorised under EMIR, the
European Central Counterparty N.V. (EuroCCP - NL) which was authorised on 1
April 2014, and NasdaqOMX Clearing AB (SE) which was authorised on 18 March
2014 respectively.
European
Supervisory Authorities publish report on risks and vulnerabilities in EU
financial system
The Joint Committee of the European Supervisory Authorities (ESAs),
comprising the European Banking Authority (EBA), European Securities and
Markets Authority (ESMA) and the European Insurance and Occupational
Pensions Authority (EIOPA), has published its bi-annual report on risks and
vulnerabilities in the EU's financial system. The report discusses
potential vulnerabilities arising from the EU macroeconomic outlook and
associated risks to the banking and insurance sectors and financial
markets, in particular asset quality, declining premium growth and
decreasing price for risk.
BoE's Haldane says funds can also be 'too
big to fail'
A top Bank of England official put the world's $87 trillion
asset-management industry on alert on Friday, saying it posed some of the
same "too big to fail" risks that are being tackled by reforms at
major banks. (Reuters)
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