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25 March - 01
April 2014 | Issue 197
China will further improve
management and tax policies for the Qualified Foreign Institutional
Investor (QFII) programme to attract more foreign investment into the
country's capital markets, the securities regulator said on Friday.
(Reuters)
Global regulators aim to
crack two of the biggest barriers to ending "too big to fail"
banks by the end of this year, Financial Stability Board Chairman Mark
Carney said on Monday. Regulators are putting in place a complex jigsaw of
rules and mechanisms to wind down failed banks without the massive market
fallout seen when Lehman Brothers went under in 2008. (Reuters)
CHINA
The People's Bank of China
said Friday that it will expand over-the-counter bond trading to increase
the range of options available to retail investors. Banks will now be able
to offer bonds issued by state development banks and quasi-government
agencies such as China Development Bank, policy banks and China Railway
Corporation, the PBOC said in a statement. (MNI News)
Renminbi clearing
in Frankfurt
To mark Chinese President Xi Jinping's visit to Berlin, the Deutsche
Bundesbank and the People's Bank of China (PBoC) have signed a memorandum
of understanding regarding the clearing and settlement of payments
denominated in the Chinese renminbi in Frankfurt. Both central banks have
agreed to intensify their cooperation in clearing and settlement
arrangements of renminbi payments. They also laid the groundwork for
establishing a clearing bank.
Local CBRCs clear
interbank business (Chinese Only)
Recently, various local banking regulatory bureaus issued notices to banks
to clear their interbank business. The required interbank business reform
mainly includes four areas: first is about the reform of business process
and procedures, including tenor and credit granting management; second is
about organizational reform. Interbank business shall be operated and
managed by a specialized department of bank's head office. Other
departments and branch institutions can no longer operate interbank
business and branch institutions cannot engage in interbank business, such
as asset transfer, selling repurchase and buying resale ; third is about
clearing interbank business products, namely product authorization and
management scope; and fourth is about IT system reform, the system should
strengthen management on interbank data quality. Meanwhile, the banking
regulatory bureaus will also conduct inspection on interbank business
risks. (NAFMII Newsletter)
CSRC issues pilot
administrative measures for preferred shares (Chinese Only)
The measures is amended in the following main aspects: first, it adds a new
provision that "listed companies are not allowed to issue preferred
shares that can be converted to ordinary shares". Meanwhile,
commercial banks can issue preferred shares which can be converted into
ordinary shares upon the occurrence of trigger events via private
placement; second, in terms of issue conditions of preferred shares, listed
companies that mull to issue preference shares shall satisfy the condition
that their average annual distributable profits in the last three fiscal
years should be no less than the dividends of preferred shares in one year;
third, the measures allows listed companies to issue preference shares via
private placement by taking the form of shelf offering; fourth, the
measures stipulates that when the number of qualified investors is
calculated, should an asset management institution and its two or more
products under its management buy or transfer preferred shares, they should
be deemed as one investor; and fifth, a new provision is added in the
measures that the par value per preferred share is rmb 100. (NAFMII
Newsletter)
China's external
debt on the rise
China's outstanding foreign debt had hit 863.2 billion U.S. dollars by the
end of 2013, up 17 percent from the figure in the previous year, data from
the country's forex regulator showed on Monday. The amount does not include
the outstanding external debt of the Hong Kong and Macao special
administrative regions or that of Taiwan, the State Administration of
Foreign Exchange (SAFE) said in a statement on its website. (Xinhua)
Shanghai has rolled out new
incentives to show is resolve to deepen economic reforms and further
encourage the city's state-owned enterprises to venture abroad. But these
efforts might expose the industrial giants to risks amid a clutch of
reckless overseas acquisitions and the establishment of new production
facilities abroad. (SCMP)
China vows joint
efforts on securing cyberspace
A Foreign Ministry spokesman vowed on Monday that China will work with the
international community to build a peaceful, secure, open and cooperative
cyberspace. Spokesman Hong Lei made the remarks at a regular press briefing
when asked to comment on a speech by U.S. Defense Secretary Chuck Hagel on
cyberspace. "The United States does not seek to militarize
cyberspace," said Hagel at the National Security Agency (NSA) headquarters
at Fort Meade, Maryland on Friday. (Xinhua)
China to chase
tax evaders with own version of US foreign account law
China is expected to introduce its own version of the new US tax law that
requires financial institutions around the world to provide Washington with
information on US taxpayers, analysts say. Such a law would make it more
difficult for corrupt Chinese officials and their relatives to park their
wealth in Hong Kong. (SCMP)
HONG
KONG
HKMA publishes
quarterly bulletin for March 2014 and half-yearly monetary and financial
stability report
The Hong Kong monetary authority has published the march 2014 issue of its
quarterly bulletin and half-yearly monetary and financial stability report.
The issue contains a feature article reviewing the Hong Kong debt market in
2013. The half-yearly report provides detailed analyses of the global and
local economy, the monetary and financial conditions of Hong Kong, and the
assessment of the recent performance and risks of the local banking sector.
Hong Kong and US
sign tax information agreement
The Secretary for Financial Services and the Treasury, Professor K C Chan,
signed today (March 25) in Hong Kong on behalf of the Hong Kong special
administrative region government an agreement with the United States of
America (US) for Exchange Of Information (EOI) relating to taxes. The
consul-general of the US to Hong Kong and Macau, Mr Clifford a Hart, Jr,
signed on behalf of his government.
SINGAPORE
Senior Management
Changes at MAS
The Monetary Authority of Singapore announced the following changes to its
senior management team: The changes will take effect on 1 April 2014.
INDIA
The Reserve Bank of India
will allow the standalone primary dealer's exposure limit to a qualifying
central counter party (QCCP) for an over-the-counter derivative transaction,
to be outside of the existing 25 percent limit of its net owned funds from
April 1. (Reuters)
Implementation of
Basel III Capital Regulations in India - Capital Planning
In terms of Basel III Capital Regulations issued by the Reserve Bank of
India, the Capital Conservation Buffer (CCB) is scheduled to be implemented
from March 31, 2015 in phases and would be fully implemented as on March
31, 2018. It has been decided that the implementation of CCB will begin as
on March 31, 2016. Consequently, Basel III Capital Regulations will be
fully implemented as on March 31, 2019.
No call taken yet
on new bank licences by Reserve Bank of India: Election Commission
The Election Commission has not taken a decision on the Reserve Bank's
request to move ahead with a proposal to grant new bank licences. According
to sources, the matter is still under consideration of the Commission,
which met today, and a decision will be taken shortly.Last week, Election
Commissioner H S Brahma had said the request would most likely be taken up
by the Election Commission on March 31. (Economic Times)
Sebi to study
surveillance systems in overseas markets
With an aim to strengthen its surveillance functions to detect fraudulent
and manipulative activities, Sebi is planning to study market intelligence
infrastructure and techniques of regulators in the US, UK, Australia and
Hong Kong. The proposed study will also include the best practices followed
in developed markets for surveillance of algorithmic and high frequency
trading, an area which has been a matter of concern not only for India but
also for many others. (Economic Times)
JAPAN
Japan CPI
suggests lingering deflation pressure
Core inflation in japan was unchanged in February from a month earlier,
suggesting the government's campaign to haul the country out of deflation
remains at a delicate stage. The weaker yen engineered by prime minister
shinzo abe - in tandem with central bank governor haruhiko kuroda - has
been the primary force behind japan's rapid pick-up in consumer price
inflation over the past year. (FT)
Drawing Lines on
Japan's Economic Map
To keep momentum going, Japan needs fundamental reforms aimed at boosting
the anemic long-term growth rate. Japan's new special economic zones, the
borders of which were revealed last week, are the next opportunity. The
zone areas are vast and include Japan's two biggest metro areas of Tokyo
and Osaka. Two rural areas are also included for agricultural reforms, and
the scenic island of Okinawa will be a test site for policies to attract
tourists. (WSJ)
AUSTRALIA
The Board decided to leave
the cash rate unchanged at 2.5 per cent. Growth in the global economy was a
bit below trend in 2013, but there are reasonable prospects of a pick-up
this year.
Joe Hockey,
states agree on 'Asset Recycling'
Treasurer Joe hockey has clinched a deal with his state counterparts,
offering new incentive payments for the states to sell off their government
- owned assets and redirect the proceeds into productive infrastructure. (The
Australian)
NEW ZEALAND
IMF: New Zealand - 2014
Article IV Consultation
Concluding Statement: Growth prospects have improved for the near term.
Business and consumer confidence is strong and commodity prices for key
exports remain high. With excess capacity largely exhausted the Reserve
Bank has begun tightening monetary policy. The government's plan to return
the budget to surplus is on track. The main external threat to the outlook
continues to be a sharp slowdown in China.
SOUTH
KOREA
KRX launches gold
spot market
Following a joint initiative announced in 2013 to facilitate transparent,
electronic trading of spot gold on a regulated exchange, the Korea exchange
has launched its first gold spot market effective from 24 march 2014. The
krx will be responsible for the market operation, trading and clearing of
the new market while Korea Securities Depository will manage storage /
withdrawal of gold and Korea minting, securities printing and ID card
operating corporation (KPMSCO) will provide quality certification and
inspection.
INTERNATIONAL
IMF: Big Banks Benefit
From Government Subsidies
Reforms since the global financial crisis have reduced, but not eliminated
the implicit government subsidy afforded to banks considered "too
important to fail" because their failure would threaten the stability
of the financial system. In its latest analysis for the Global Financial
Stability Report, the IMF shows that big banks still benefit from implicit
public subsidies created by the expectation that the government will
support them if they are in financial trouble.
IMF: Emerging
Markets Can Manage Evolving Mix of Global Investors
The mix of investors in emerging markets stocks and bonds has evolved
considerably over the past 15 years, which has made capital flows and asset
prices in these countries more sensitive to events outside their own
borders, according to new research from the International Monetary Fund.
At its meeting in London, the
Financial Stability Board discussed vulnerabilities affecting the global financial
system and reviewed work plans for completing core financial reforms.
UNITED STATES
Yellen strongly
defends easy Fed policies, cites US labor slack
Federal Reserve Chair Janet Yellen gave a strong defense of the central
bank's easy-money policies on Monday, saying its "extraordinary"
commitment to boosting the economy, especially the still struggling labor
market, will be needed for some time to come. (Reuters)
FRB Governor
discusses regulation of large foreign banking organisations
Federal Reserve Board (FRB) Governor Daniel K. Tarullo has delivered a
speech on the regulation of large foreign banking organisations at a
Harvard Law School Symposium. His remarks focused on the vulnerabilities in
the US and EU banking systems which were exposed during the 2007-2009
financial crisis. Governor Tarullo defended new regulatory rules which have
been put in place to compel foreign banks to hold more capital in their US
units, arguing that the rules are necessary to protect the US financial
system from another meltdown.
The Commodity Futures Trading
Commission is preparing to impose additional conditions on European swaps
trading platforms while granting them relief from certain U.S. rules,
according to people familiar with the matter. The CFTC plans to require the
European venues to implement a series of new compliance measures to bring
their standards more in line with U.S. platforms, in exchange for exempting
them from having to register with the commission. (WSJ)
Negotiations to create a
transatlantic free trade zone risk collapsing if the EU has to drop a
provision giving investors the right to seek compensation before special
arbitration panels, Europe's top trade official has warned. The warning on
Thursday from Karel De Gucht, the EU's trade commissioner, highlighted how,
even as US President Barack Obama toured Europe this week touting the
potential benefits of a transatlantic trade deal, the pact itself is facing
an uphill struggle. (FT)
The
Federal Bureau of Investigation is probing whether high-speed trading firms
are engaging in insider trading by taking advantage of fast-moving market
information unavailable to other investors. The investigation, launched
about a year ago, involves a range of trading activities and is still in
its early stages, according to a senior FBI official and an agency
spokesman (WSJ)
EUROPE
EU Commission
consults on investor protection in EU-US trade deal
The EU Commission has launched a public consultation on investor protection
and investor-to-state dispute settlement in the proposed EU-US trade deal,
known as the Transatlantic Trade and Investment Partnership. The EU-US
negotiations for the Transatlantic Trade and Investment Partnership started
in July 2013 and aim at removing trade barriers in a wide range of economic
sectors to make it easier to buy and sell goods and services between the EU
and the US. Comments are due by 21 June 2014.
Eurozone
inflation falls to 0.5% in March
The Eurostat estimate puts the inflation rate well below the European
Central Bank target of just below 2%. The figure is lower than the 0.6%
rate expected by analysts. The lower-than-expected rate may reinforce
concerns that the 18-nation eurozone risks a damaging period of deflation.
(BBC)
Bank of England
says may revive securitisation to aid recovery
The Bank of England may try to revive the securitised debt market to
support the economic recovery, a policymaker said on Friday, in the latest
sign that products that triggered the financial crisis are being brought in
out of the cold. Clara Furse, a member of the British central bank's
Financial Policy Committee, said small firms are finding it hard to get
loans from banks focused on meeting tougher capital requirements following
the 2007-09 financial crisis. (Reuters)
Financial Conduct
Authority to investigate how firms deal with risk benchmark manipulation
The Financial Conduct Authority has announced plans to look into how firms can
reduce the risk of traders manipulating key benchmarks as a central part of
its Business Plan for 2014/15, which was published. The forward-looking
thematic review will assess whether firms have learnt lessons from LIBOR
and other recent controversies and ask if adequate controls on traders
behaviour and activity are now in place to prevent future manipulation of
benchmarks.
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