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ASIFMA Asia Regulatory Review

1 - 8 March 2016 | Issue 289


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!



China sets deadline for VAT reform

Chinese finance minister said that business tax in all industries will be replaced by value-added tax (VAT) before May this year, a concrete step in deepening fiscal and taxation reform. "The progress in the VAT reform last year was slower than having planned, efforts would be made to meet the May 1 deadline," Lou Jiwei, minister of Finance, said at a press conference on the sidelines of the National People's Congress annual session. Starting from May 1, the replacement of business tax with VAT will be extended to construction, real estate, finance and consumer services, to ensure that the tax burdens on all industries be reduced, Premier Li Keqiang said in a government work report to the national legislature. (Xinhua)

Head of top think tank proposes 'super regulator' after push by Xi
A top economic think tank has proposed setting up a super regulator overseeing the finance industry, but industry insiders said it would be of more political significance than economic. Chi Fulin, president of the China Institute for Reform and Development and also a member of the Chinese People's Political Consultative Conference (CPPCC), has submitted a proposal suggesting that the three commissions supervising the mainland's securities, banking and insurance markets be merged. (SCMP)

China financial regulators say more co-ordination, data sharing necessary to quell volatility, fraud
China's stock markets have room for improvement when it comes to coordination and data sharing among regulators to help quell excessive volatility and prevent potential market manipulation, according to a top financial official in Shanghai. Gui Minjie, chairman of the Shanghai Stock Exchange, acknowledged difficulties in monitoring leveraged capital flows, and indicated the need for enhanced data tracking and information sharing with other regulators. (SCMP)


SFC concludes consultation on changes to ATS Guidelines
The Securities and Futures Commission (SFC) published conclusions to the consultation on proposed amendments to the Guidelines for the Regulation of Automated Trading Services (ATS). In light of the respondents' comments, the SFC has made a few changes to the proposed amendments by way of clarification.

SFC publishes consultation conclusions on Principles of Responsible Ownership
The Securities and Futures Commission (SFC) released the consultation conclusions on the Principles of Responsible Ownership which aim to provide guidance on how investors should fulfil their ownership responsibilities in relation to investments in Hong Kong listed companies. Having carefully considered all the respondents' comments, the SFC has decided to introduce the proposed principles with minor changes, removing references to individual and retail investors from the principles.

SFC stresses accurate, clear and balanced disclosure of inside information
The Securities and Futures Commission (SFC) published the latest issue of its Corporate Regulation Newsletter reminding listed companies to disclose inside information in an accurate, clear and balanced manner and to ensure equal, timely and effective access by the public. The newsletter is part of the SFC's initiative to enhance the quality of disclosures by listed companies and to improve corporate behaviour in general.

SFC and DoJ sign MoU to strengthen cooperation in handling criminal cases
The Securities and Futures Commission (SFC) and the Department of Justice (DoJ) entered into a Memorandum of Understanding (MoU) to formalise and further strengthen cooperation in the handling of criminal cases under the Securities and Futures Ordinance (SFO) and other relevant legislation.

HKEx - Survey finds investors outside Hong Kong and Exchange Participants' principal trading are driving trading growth in HKEX's securities market
The Cash Market Transaction Survey 2014/15 conducted by Hong Kong Exchanges and Clearing Limited (HKEX) found that the increases in the value of overseas investor trading and Exchange Participants' (EPs') principal trading underpinned the strong growth in the value of all market trading. According to the survey findings, the contribution of investors outside Hong Kong to total trading in HKEX's securities market from October 2014 to September 2015 (2014/15) was steady at 39 per cent, while their trading value increased by 71 per cent from the previous 12-month period (2013/14), compared to an increase of only 45 per cent in trading value from local investors, whose market share fell to 39 per cent.


MOF Invites the Public to Give Feedback on Changes to the Income Tax Act
The Ministry of Finance is conducting a public consultation on the draft Income Tax (Amendment No. 2) Bill 2016 from 1 to 18 March 2016, and invites the public to give feedback on the draft Bill. The proposed amendments to the Income Tax Act ("ITA") allow Singapore to implement the Common Reporting Standard ("CRS") with effect from 1 Jan 2017. This is necessary before Singapore can carry out her international commitment to commence automatic exchange of financial account information ("AEOI") under the CRS in 2018.

MAS - Recent Economic Developments in Singapore, March 2016
This is a brief which aims to provide a quick pictorial summary of recent economic developments in the Singapore economy.


The Bank of Japan - Answers to Frequently Asked Questions on "Quantitative and Qualitative Monetary Easing (QQE) with a Negative Interest Rate"
Speech by Haruhiko Kuroda, Governor of the Bank of Japan

JSDA - Interim Report of the Working Group on Shortening Stock Settlement Cycle
- Brochure "Move to T+2 Settlement in Japan"


RBI brings Capital Treatment of Banks' Balance Sheet Items in closer Alignment with Basel Framework
On a review of the existing capital adequacy guidelines, the Reserve Bank of India today made some amendments to the treatment of certain balance sheet items for the purposes of determining banks' regulatory capital. The review was carried out with a view to further aligning the definition of regulatory capital with the internationally adopted Basel III capital standards, issued by the Basel Committee on Banking Supervision (BCBS).

RBI - Master Circular - Basel III Capital Regulations - Revision
The Reserve Bank has reviewed the position in this regard and it has been decided to align, to some extent, the current regulations on treatment of these balance sheet items, for the purpose of regulatory capital, with the BCBS guidelines.


ASIC reports on cyber resilience and shares examples of emerging good practices
ASIC has released its first assessment report on the cyber resilience of ASX and Chi-X. In addition, we have taken this opportunity to highlight emerging good practices being implemented by a wider sample of organisations within the financial sector. The report concludes that ASX and Chi-X have, up to this point in time, met their statutory obligations to have sufficient resources for the management of cyber resilience.

RBA - Resilience and Ongoing Challenges
Speech by Philip Lowe, Deputy Governor.


KRX - Implementation of Single Price Auction for Super Low Liquidity Issues during Regular Session
The Korea Exchange (KRX) has decided to change the trading method for super low liquidity issues during the regular trading hours from continuous trading with multiple prices to the single price auction with 10 minute interval in order to improve the convenience of trading. It will be implemented on June 27, 2016.


Government, House reach impasse over use of state funds for bailouts
The government and legislators failed to agree on the use of state funds to salvage banks in times of crisis, forcing a delay to the deliberation of the financial system crisis prevention bill. Talks on the bill, officially known as the financial system crisis prevention and mitigation bill (PPKSK), will resume at the House of Representatives. The deliberation was attended by Finance Minister Bambang Brodjonegoro, Bank Indonesia (BI) Governor Agus Martowardojo, Financial Services Authority (OJK) chairman Muliaman D. Hadad and Deposit Insurance Corporation (LPS) chairman Halim Alamsyah. (Jakarta Post)

New hedging rule to boost Islamic banks' forex transactions
Islamic banks may enjoy improved growth in foreign exchange transactions as a new rule on hedging transactions issued by Bank Indonesia (BI) is expected to help reduce currency risks. The new rule, effective from Feb. 26, allows Islamic banks to conduct hedging activities, including forward agreements, as a follow-up to the same fatwa issued last year by the Indonesian Ulema Council's (MUI) National Sharia Board. Prior to the issuance, stand-alone Islamic banks and Islamic lenders, subsidiaries of conventional banks often, faced difficulty in growing businesses related to foreign exchange (forex) as they could not conduct hedging activities. (Jakarta Post)


IOSCO Publishes the Securities Markets Risk Outlook 2016
The Outlook is a forward-looking report focusing specifically on issues relevant to securities markets and on whether these may be, or could become, a threat to the global financial system. For this edition of the Outlook, the scope goes beyond financial stability to also include IOSCO's two other key objectives: investor protection and market efficiency. The report highlights the importance that IOSCO attaches to pre-emptive work on analyzing and detecting emerging risks in securities markets, which are playing an increasingly bigger role in financing the global economy

Basel III Monitoring Report March 2016
This report presents the results of its latest Basel III monitoring exercise. The Committee established a rigorous reporting process to regularly review the implications of the Basel III standards for banks, and it has published the results of previous exercises since 2012. Data have been provided for a total of 230 banks, comprising 101 large internationally active banks ("Group 1 banks", defined as internationally active banks that have Tier 1 capital of more than 3 billion Euros) and 129 "Group 2 banks" (ie representative of all other banks).


ESMA issues report on risks and costs of CCP interoperability
The European Securities and Markets Authority (ESMA) issued it's final report on systemic risk and cost implications of interoperable arrangements between central clearing houses (CCPs) established under the European Market Infrastructure Regulation (EMIR).

EBA seeks comments on reporting of prudent valuation information
The European Banking Authority (EBA) launched a public consultation on the inclusion of prudent valuation into COREP, the reporting framework through which EU banking institutions report supervisory information. The amendments proposed by the EBA reflect the prudent valuation requirements in Commission Delegated Regulation (EU) No 2016/101. This public consultation will run until 30 March 2016.

EBA publishes results of the CRDIV-CRR/Basel III monitoring exercise as of 30 June 2015
The European Banking Authority (EBA) published its ninth report of the CRDIV-CRR/Basel III monitoring exercise on the European banking system. This exercise, run in parallel with the one conducted by the Basel Committee on Banking Supervision (BCBS) at a global level, allows the gathering of aggregate results on capital - risk-based and non-risk-based (leverage) ratios - and liquidity ratios - the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) - for banks in the European Union (EU). It summarises the results using data as of 30 June 2015.

EBA publishes its annual assessment of EU colleges of supervisors
The European Banking Authority (EBA) published its annual assessment of EU colleges of supervisors, the forum within which joint decisions on capital and liquidity and recovery plans are organised for EU cross border banking groups. The report assesses how colleges have functioned during 2015 and identifies key activities for the effective oversight of EU cross border banking groups in 2016. In addition, it draws the attention of supervisors to some specific items for 2016, including non-performing loans (NPLs) and balance sheet cleaning, business model sustainability, conduct risk and IT risk.

The Bank of England - Central banks and digital currencies
Speech by Ben Broadbent.

FCA - Policy Development Update - Issue 31
The Policy Development Update provides information on: publications issued since the last edition; information about recent Handbook-related and other development; other publications - consumer publications, guidance consultations and finalised guidance; and an updated timetable for forthcoming publications.

FCA - New accountability regime for banks and insurers comes into force
The Senior Managers Regime for the banking sector and the Senior Insurance Managers Regime both come into force. The new regimes will hold individuals working at all levels within relevant firms to appropriate standards of conduct and ensure that senior managers are held to account for misconduct that falls within their area of responsibility.

FCA - Consequential Changes to the Senior Managers Regime
In this Policy Statement we report on the main issues arising from Consultation Paper 16/1 Consequential Changes to the Senior Managers Regime and publish the final rules.

FCA - Guidance on the FCA's approach to the implementation of ring-fencing an d ring-fencing transfer schemes
In September 2015 we consulted on proposed guidance on our approach to ring-fencing transfer schemes (RFTSs ) and, more generally, our key responsibilities in supporting the wider implementation of ring-fencing in the UK.

Treasury Select Committee Hearing - The economic and financial costs and benefits of UK's EU membership: Mark Carney & Jon Cunliffe
Mark Carney and Jon Cunliffe give evidence on the Economic and financial costs and benefits of UK's EU membership


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