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ASIFMA Asia Regulatory Review

23 FebruAry - 1 March 2016 | Issue 288


ASIFMA's 6th China Capital Markets Conference to be held on Wednesday 27 April 2016 in Singapore
ASIFMA's signature conference provides an industry-wide and timely platform for global and regional policymakers, senior regulators, asset managers, corporate treasurers, infrastructure and green financing firms, fintech firms and China-watchers to discuss the development of China's capital markets as the country's story has grown beyond offshore RMB and RMB internationalization. Register now given seats are limited!



G20 Finance Ministers and Central Bank Governors Meeting Communique
At the meeting, the Ministers and Governors discussed key global economic challenges, the policy agenda for the Hangzhou Summit and identified vulnerabilities to global economic prospects including, among other things, volatile capital flows, reduced commodity prices, geopolitical tensions and a potential UK exit from the EU.

PBC further opens interbank bond market to overseas institutional investors
To further open up the interbank bond market and facilitate the investment of eligible overseas institutional investors in accordance with laws and regulations, the People's Bank of China (PBC) issued the No.3 Notice, 2016 to abolish the quota restriction and streamline the administrative procedures, aiming at attracting more eligible overseas institutional investors,. According to the Notice, all types of financial institutions that legally registered and established outside the People's Republic of China, their investment products issued according to laws and regulations, and other medium and long-term institutional investors recognized by the PBC such as pension fund, charity fund and donation fund are qualified to invest in the interbank bond market. To ensure the steady and sound development of the bond market, the PBC encourages medium and long-term overseas institutional investors to invest in the interbank bond market without restriction on the quota. And PBC will carry out macro-prudential management of their investment behaviors. To invest in China's interbank market, eligible overseas institutional investors should, through the settlement proxy, finish procedures such as registration, opening accounts, etc. (NAFMII Newsletter)


Hong Kong Financial Services Development Council - Hong Kong's Position Limits Regime for Exchange-traded Derivatives - the Need for Revision
This paper examines Hong Kong's existing position limits regime for exchange traded-derivatives and its shortcomings. It considers the regime's impact on Hong Kong's derivatives market, and puts forward considerations for possible revisions.

Reshuffling of Management Duties in the Hong Kong Monetary Authority
The Hong Kong Monetary Authority (HKMA) announced that Mr Peter Pang, Deputy Chief Executive, will retire effective 26 February 2016. Mr Pang will be succeeded by Mr Howard Lee, Senior Executive Director. There will also be reshuffling of duties among the Senior Management.

SFC concludes on expanding scope of short position reporting
The Securities and Futures Commission (SFC) published conclusions to a consultation to expand the scope of short position reporting and on corresponding amendments to the Securities and Futures (Short Position Reporting) Rules (SPR Rules). After considering market feedback, the SFC has concluded that short position reporting will be expanded to cover all securities that can be short sold under the rules of The Stock Exchange of Hong Kong Limited. The reporting threshold for stocks will remain unchanged, while the threshold for collective investment schemes will be set at $30 million.

SFC - Executive Director, Intermediaries Division
The Securities and Futures Commission (SFC) announces that Ms Julia Leung, currently Executive Director, Investment Products, will succeed Mr James Shipton as Executive Director, Intermediaries Division with effect from 19 June 2016.


MAS Amends the Singapore Code on Take-Overs and Mergers
The Monetary Authority of Singapore (MAS), on the advice of the Securities Industry Council (the Council), has issued a revised Code on Take-overs and Mergers (Code) pursuant to section 139(6) of the Securities and Futures Act.

SGX proposes introducing 10% allocation of Mainboard IPO shares for retail investors
Singapore Exchange (SGX) is proposing that Mainboard companies allocate to retail investors a minimum 10% of shares in their initial public offers (IPOs), up to a maximum of S$100 million. This is the second consultation on the introduction of a mandated minimum IPO allocation to retail investors. The first consultation in 2012 proposed a 5% retail allocation.


The Bank of Japan - Developing a Global Code of Conduct for the Foreign Exchange Market
Opening Remarks by Hiroshi Nakaso, Deputy Governor of the Bank of Japan.

The Bank of Japan - Recent Developments in Economic Activity, Prices, and Monetary Policy
Speech by Takahide Kiuchi, Member of the Policy Board.

JFSA - Financial Policies Monitor
Based on the Strategic Directions and Priorities 2015-2016, announced in September 2015, the FSA has established the Financial Policies Monitor (System) to receive candid opinions and suggestions concerning financial policies and to reflect these in the FSA's financial policies. This approach is aimed at establishing a structure to conduct proactive financial policies to keep pace with the changes in the domestic and global environment surrounding the financial fields.


RBI partially modifies/clarifies Prudential Guidelines on Revitalising Stressed Assets in the Economy
On a review and based on feedback received from stakeholders, the Reserve Bank of India has partly modified and also clarified, some aspects of its Prudential Guidelines for Revitalising Stressed Assets in the Economy. The revised guidelines will be applicable prospectively.

RBI approves SWIFT India Domestic Services Private Limited (SIDSPL) for Domestic Financial Messaging Services in India
The Reserve Bank of India has granted approval to SWIFT India Domestic Services Private Limited (SIDSPL) to provide messaging services for domestic financial transactions in India.

Comprehensive Master Directions on Know Your Customer (KYC)
The Reserve Bank of India issued the Master Direction on Know Your Customer (KYC), Anti-Money Laundering (AML) and Combating of Financing of Terrorism (CFT). The Master Direction issued consolidates all relevant instructions issued by different departments of the Reserve Bank so far on the subject and will be applicable to all its regulated entities.

RBI Working Paper Series No. 3: Global Spillovers and Monetary Policy Transmission in India
The Reserve Bank of India placed on its website a Working Paper titled Global Spillovers and Monetary Policy Transmission in India under the Reserve Bank of India Working Paper Series. The Paper is co-authored by Michael Debabrata Patra, Sitikantha Pattanaik, Joice John and Harendra Kumar Behera.

SEBI - Circular on Mutual Funds
The circular covers the treatment of unclaimed redemption and dividend amounts, and the distribution of Mutual Fund products.


Australian Government - The Treasury - Client money reforms
The Government released draft legislation and regulation to reform the Australian client money regime, and the associated explanatory materials. The Corporations Amendment (Client Money) Bill 2016 and Corporations Amendment (Client Money) Regulation 2016 give effect to the proposals made in the policy paper, and deliver on the Government's commitment to better protect retail client money - while continuing to facilitate the efficient operation of wholesale derivatives markets. Closing date for submissions: Friday, 25 March 2016

APRA consults on margining and risk mitigation requirements for non-centrally cleared derivatives
APRA's draft Prudential Standard CPS 226 Margining and risk mitigation for non-centrally cleared derivatives (CPS 226), proposes to require APRA-regulated institutions that transact in non-centrally cleared derivatives to: - meet new risk mitigation requirements that are intended to increase the transparency of bilateral positions between counterparties, promote legal certainty over the terms of non-centrally cleared derivative transactions and facilitate the timely resolution of disputes; and - exchange margin (i.e. collateral) to mitigate counterparty credit risk associated with their derivative activities, when the level of this activity exceeds minimum qualifying levels.

BNM - Keynote Address at the SWIFT Business Forum Malaysia
Speech by Datuk Muhammad bin Ibrahim, Deputy Governor.


PSE: Ownership disclosure rules risky for market
The Philippine Stock Exchange (PSE) fears the local capital market may be put at risk if the Securities and Exchange Commission's (SEC) is set on implementing rules and regulations that require stockbrokers and securities dealers to disclose the identity of the indirect owners of stocks they manage. "The way it [2015 IRR] has been constructed is defective. I am not talking about it from a regulator’s perspective, because from a regulator's perspective, if you were to put this into practice then I can find that all the listed companies at the PSE cannot define the beneficial and nth beneficial owner [of stocks are]," said PSE president Hans Sicat. (Manila Bulletin)


FSB Chair sets out to the G20 the FSB work programme for 2016
The letter sets out the FSB's priorities for 2016 which are:

  1. Supporting the full and consistent implementation of post crisis reforms,while remaining ready to address any material unintended consequences.
  2. Addressing new and emerging vulnerabilities in the financial system, including potential risks associated with market-based finance, asset management activities, conduct, correspondent banking and climate change.
  3. Promoting robust financial infrastructure, working with the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions to assess policies on central counterparty (CCP) resilience, recovery and resolvability, and recommending any necessary improvements.
    The FSB will also be supporting the objectives of the Chinese G20 Presidency by:
  4. Drawing lessons, working with the International Monetary Fund and the Bank for International Settlements, from the practical application of macroprudential policy frameworks and tools
  5. Assessing the systemic implications of financial technology innovations, and the systemic risks that may arise from operational disruptions.

FSB releases report on possible measures of non-cash collateral re-use
This report describes possible measures of non-cash collateral re-use, and the related data elements, that could potentially be included in the FSB's global securities financing data standards. Authorities would be asked to report national/regional aggregates of these measures to the FSB. The report is intended to provide a starting point for discussions with market participants and researchers concerning the derivation of a meaningful measure(s) of collateral re-use to be used to evaluate global trends and to assess risks to financial stability. The FSB welcomes comments on the report including the scope, possible measures of non-cash collateral re-use and the data elements set out in this document. Comments and responses to questions should be submitted by 22 April 2016

IOSCO issues Second Review of Implementation of Principles by IBOR Administrators
The report sets out the findings of the second review of the implementation of IOSCO's Principles for Financial Benchmarks by the administrators of the benchmarks collectively known as the IBORs: the Euro Inter-Bank Offer Rate (EURIBOR); the London Inter-Bank Offer Rate (LIBOR); and the Tokyo Inter-Bank Offer Rate (TIBOR). It was prepared by a Review Team, constituting members of the IOSCO Board-level Task Force on Financial Market Benchmarks and the IOSCO Assessment Committee.

ISDA Publishes Principles for US/EU Trading Platform Recognition
The International Swaps and Derivatives Association, Inc. (ISDA) published a set of principles for achieving comparability determinations between US and European Union (EU) trading platforms. The paper analyzes the regulatory frameworks in the US and EU, with the aim of determining whether EU trading platforms should be deemed comparable with those in the US. Underpinning the analysis is the principle that regulators should focus on broad outcomes and similarities, rather than conduct a granular, rule-by-rule comparison of the two frameworks.


CFTC Requests Public Comment on Request from LCH.Clearnet Ltd for Order Permitting Portfolio Margining of Futures and Foreign Futures Contracts and Cleared Swaps Contracts
The U.S. Commodity Futures Trading Commission (CFTC) is requesting public comment on a petition submitted by LCH.Clearnet Ltd for an order pursuant to Section 4d(f) of the Commodity Exchange Act (Act). The petition requests an order that would permit LCH.Clearnet Ltd and its clearing members that are registered futures commission merchants to: (1) commingle in an account subject to Section 4d(f) (a cleared swaps customer account) futures and foreign futures positions and cleared swaps positions, and related customer money, securities, and property; and (2) portfolio margin futures and foreign futures contracts and cleared swaps contracts in the cleared swaps customer account.

CFTC EEMAC Releases Report on 2015 Review and Consideration of the Proposed Rule on Position Limits
U.S. Commodity Futures Trading Commission (CFTC) Commissioner J. Christopher Giancarlo, who serves as the sponsor of the CFTC's Energy and Environmental Markets Advisory Committee (EEMAC or Committee), announced today that the Committee has submitted to the CFTC a report and recommendations approved by an 8-1 vote of the EEMAC. The report also includes a minority dissent.


EBA launches 2016 EU wide stress test exercise
The European Banking Authority (EBA) released the methodology and macroeconomic scenarios for the 2016 EU-wide stress test. The stress test is designed to provide supervisors, banks and other market participants with a common analytical framework to consistently compare and assess the resilience of EU banks to economic shocks. For this exercise, no single capital thresholds have been defined as the results will inform the 2016 round of Supervisory Review and Evaluation Processes (SREP) under which decisions are made on appropriate capital resources. The EBA expects to publish the results of the exercise in early Q3 2016.

EBA updates its Risk Dashboard for EU banking sector
The European Banking Authority (EBA) published the periodical update to its Risk Dashboard summarising the main risks and vulnerabilities in the banking sector on the basis of the evolution of a set of Risk Indicators (RI) across the EU. The dashboard is based on a larger sample of banks (154 institutions on a consolidated basis1) and the "Statistical Annex" provides further data on EU banks. The ratios published in the Dashboard are computed according to the "Methodological guide on risk indicators and detailed risk analysis tools", also published.

PRA and FCA statement on compliance with the EBA guidelines on Sound Remuneration Policies
The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have notified the European Banking Authority (EBA) that the regulators will comply with all aspects of the EBA Guidelines on Sound Remuneration Policies, except for the provision that the limit on awarding variable remuneration to 100% of fixed remuneration, or 200% with shareholder approval (the bonus cap), must be applied to all firms subject to the Capital Requirements Directive (CRD).

FCA - UK FinTech: Regulating for innovation
Speech by Christopher Woolard, FCA Director of Strategy and Competition



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