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08 - 13 May 2014
| Issue 203
ASIFMA Launches
RMB Roadmap
ASIFMA, together with Standard Chartered and Thomson Reuters, today
launched the "RMB Roadmap", a new white paper which advocates and
anticipates more open capital markets and increased global usage of
renminbi as part of the currency's rise to greater prominence.
China's
cabinet, the State Council, on Friday unveiled the guiding principles of
regulations for the capital market in coming years. The first guideline
envisions a multi-tier capital market by 2020 with a proper structure,
functions and regulations, high efficiency and inclusiveness. (Xinhua)
Hong Kong and the United
States have substantially concluded discussions on an inter-governmental
agreement that will facilitate Hong Kong financial institutions' compliance
with the US Foreign Account Tax Compliance Act. The two places are expected
to formally sign the agreement later this year.
CHINA
All offshore markets need to
be highly connected and integrated into one global offshore renminbi market
without legal or operational restrictions on the flow of renminbi between
different offshore jurisdictions. As such, offshore renminbi bond issuers
will not have to consider in which market they will issue the
bonds said Patrick Pang. (FinanceAsia)
A Chinese central banker
today urged tougher rules to rein in shadow banking as its unchecked growth
has helped drive up borrowing costs and threatens to undermine the
financial system in the world's second-biggest economy. Financial
innovation in the interbank market and wealth management products has often
been aimed at evading regulations on issues such as risk provisioning and
capital adequacy, Liu Shiyu, deputy governor of the People's Bank of China,
said at a forum in Beijing today. (Bloomberg)
People's Bank of China (PBC)
released China Monetary Policy Report Q1 2014. The Report is divided into
five sections, providing analyses over Monetary and Credit Policy, Monetary
Policy Operations, Financial Markets, Macro-economy and Monetary Policy
trends respectively. According to the Report, the central bank will combine
monetary policy with deepening reform more closely in the future, enabling
the market to play a more decisive role in resource allocation, further
improve regulation mode, dredge transmission mechanism, improve financial
services through increasing supply and competition, improving operational
efficiency and the ability to serve the real economy. PBC will stick to the
bottom line of preventing systematic and regional financial risks from
happening. (NAFMII Newsletter)
China should resolve to
reorganize redundant financial innovations that do no good for the sector's
development and the real economy, senior officials from the country's
financial regulators have said. Some financial inter-bank business and
investment services should be rectified for the healthy growth of the
country's finance, Liu Shiyu, deputy governor of the People's Bank of
China, said at a forum held in Beijing that ended on Sunday. (Xinhua)
China has set up a state
finance institute, expected to become the country's leading financial think
tank, to address increasing complexity and the country's progress in
opening-up and reform. The institute, to be operated by the PBC School of
Finance under Tsinghua University, was co-founded by the university and
China's major financial regulators, including the People's Bank of China
and three top watchdogs for the banking, stock and insurance sectors.
(Xinhua)
This is the first MOU signed
by the PBC and another central bank on bilateral AML regulatory
cooperation. The signing of this MOU is important for furthering China's
AML exchanges with other countries, strengthening communication and
cooperation with fellow AML regulators around the world, and for ensuring
that the AML work of Chinese financial institutions are conducted in
accordance with laws and regulations in places beyond Chinese borders.
On 8th May 2014, Bank of
China successfully launched its first offshore Renminbi (RMB)
"Schengen bond". This bond, which will be listed on the Euro MTF
market of the Luxembourg Stock Exchange, has enabled Bank of China to be
the first Chinese mainland company to issue RMB bonds in the Eurozone.
China's government is
drafting rules to help manage the fallout of any bank failure, two people
with knowledge of the matter said, as lenders in the country face rising
loan defaults and increased competition. The People's Bank of China and the
China Banking Regulatory Commission are working on a plan to ensure the
safety of deposits and an orderly repayment of financial firms' liabilities
during a crisis. (Bloomberg)
HONG
KONG
Secretary for Commerce &
Economic Development Gregory So gave these remarks at an ASEAN Leadership
Forum session in Nay Pyi Taw, Myanmar.
The Competition (Amendment)
Bill 2014 has been gazetted and will be tabled at the Legislative Council
for first and second readings on 14 May 2014. The Bill seeks to amend the
Competition Ordinance to ensure the proper function of the Competition
Tribunal upon the ordinance's full commencement.
OTC Clear is Now
Able to Offer its Services to US Clearing Members
OTC Clearing Hong Kong Limited (OTC Clear), a subsidiary of Hong Kong
Exchanges and Clearing Limited (HKEx) established to clear over-the-counter
derivatives transactions, has received no-action relief from the US
Commodity Futures Trading Commission (CFTC), allowing it to offer its
clearing services to eligible US persons or affiliates of US persons (US
Clearing Members) without being registered as a derivatives clearing
organisation (DCO).
Charles Li blog post.
SINGAPORE
Singapore and the United
States have substantially concluded discussions on an intergovernmental
agreement (IGA) that will facilitate compliance with the US Foreign Account
Tax Compliance Act (FATCA) by Singapore-based financial institutions.
INDIA
A number of exit polls are
suggesting that Narendra Modi, the leader of India's main opposition BJP,
is on course to win the general election. The BJP dominated the campaign
but analysts warn that exit polls have often been wrong in the past. (BBC)
Chidambaram
pitches for more investments to attain higher growth
Finance Minister P. Chidambaram on Thursday made a strong case for
encouraging foreign and domestic investment to boost growth and said PSUs
alone are expected to pump in Rs 1.33 lakh crore in the current financial
year. "Investment must revive in this country...the economy has
stabilised. The investment cycle has to start again. Both domestic
investment and foreign investment must be encouraged. That will lead us to
high growth," he said while addressing the media at the AICC
headquarters. (The Hindu)
JAPAN
The Bank of Japan will set
aside four times the amount of money it normally would as reserves to
offset the risk posed by the assets it is rapidly adding to its balance
sheet with its quantitative easing. The BOJ said on Friday that it has
requested permission from the finance ministry to set aside 20 percent of
the funds left over after the central bank closes its books for fiscal
2013, which ended in March. The finance ministry is likely to approve.
(Reuters)
The Financial Services Agency
and the Bank of Thailand signed the Exchange of Letters for Cooperation
(EOL) on May 9, 2014.
AUSTRALIA
Analysis of Australia's
economic outlook and current development.
The prime minister has assured
his Liberal and National MPs and senators that the government has not
"squibbed" the budget task. "This is a watershed moment,
when a bold new government does what has to be done to set the nation on a
better course," he said. Mr Abbott said the public will respect the
government for the budget, even if there are parts of it people don't like.
(The Australian)
NEW
ZEALAND
The Reserve Bank is seeking
stakeholders' input for a strategic review of its payment and settlement
systems. The Reserve Bank announced last year that it would review the
Exchange Settlement Account System (ESAS) and NZClear Securities Settlement
System (NZClear) that it owns and operates. The review is in anticipation
of substantial upgrades that are necessary over the next 2-5 years. The
deadline for submissions is 20 June 2014.
THAILAND
The 24th ASEAN Summit
provided an opportunity for ASEAN Leaders to review progress in ASEAN
Community building efforts and identify priority issues that need to be
expedited, as well as set future directions of ASEAN in the context of
setting the ASEAN Community's Post-2015 Vision. The Leaders also exchanged
views on important regional and international issues.
VIETNAM
Countries involved in
negotiations for an ambitious Pacific free trade agreement began talks in
Vietnam's Ho Chi Minh City on Monday, aiming to strike a deal in time for a
ministerial meeting set to be held in Singapore on May 19-20. Over the next
four days, the chief negotiators from the 12 Trans-Pacific Partnership
member nations will focus on resolving tough remaining issues such as
tariffs, especially in areas such as politically sensitive agricultural
goods, intellectual property and reform of state-owned companies. (Global
Post)
INTERNATIONAL
The FSB has published the
second and final stage of its thematic peer review on implementation of the
FSB principles for reducing reliance on credit rating agencies (CRAs)
rating. The report focused on the action plans developed by national
authorities to implement the FSB roadmap.
In a speech on Tuesday, Jon
Cunliffe reviews the progress made by regulators in addressing the issue of
Too Big To Fail and sets out some remaining issues. He describes the
two-pronged approach taken by regulators: first, to reduce, but not
eliminate, the probability of failure by increasing the resilience of
financial institutions; second, managing the impact of failure via the
resolution framework and by making investors bear losses.
UNITED STATES
Financial
Stability Oversight Council Releases Fourth Annual Report
The Financial Stability Oversight Council (Council) today unanimously
approved its 2014 annual report, which was developed collaboratively by the
members of the Council and their agencies and staffs. Under the Dodd-Frank
Act, the Council must report annually to Congress on a range of issues,
including significant financial market and regulatory developments,
potential emerging threats to the financial stability of the United States,
and the activities of the Council.
Federal Reserve Bank of
Atlanta President Dennis Lockhart said he expects the central bank will use
a reverse-repurchase program when it eventually begins to tighten monetary
policy. "I am confident reverse repos will be among our tool bag and
will therefore may very well have a role in how we try to influence
short-term interest rates," Lockhart said to reporters yesterday after
a speech in Dubai. (Bloomberg)
U.S. Treasury Secretary Jacob
J. Lew said he will call on Chinese leaders to let markets determine the
value of the yuan and to avoid postponing measures to overhaul their
economy even as growth falters. "They obviously have to worry about
their short-term economic situation," Lew said in an interview on
Bloomberg Television's "Political Capital with Al Hunt," airing
this weekend. "What they can't do is treat the long-term reforms as
something they can just put off. They need to be serious about it."
(Bloomberg)
EUROPE
Steven Maijoor, ESMA Chair,
Keynote Speech at the AFME Post Trade Conference, London.
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