25 November - 9 December 2015 | Issue 279
IMF's Executive Board Completes Review of SDR Basket, Includes Chinese Renminbi
The Executive Board of the International Monetary Fund (IMF) completed the regular five-yearly review of the basket of currencies that make up the Special Drawing Right (SDR). A key focus of the Board review was whether the Chinese renminbi (RMB) met the existing criteria to be included in the basket. The Board decided that the RMB met all existing criteria and, effective October 1, 2016 the RMB is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency.
China to take bigger steps on opening up its financial market
China is ready to intensify measures to open up its financial market, a high-level government meeting said. The promise followed the inclusion of the renminbi in the International Monetary Fund's basket of currencies with special drawing rights. China will promote greater use of the renminbi in cross-border transactions and better convertibility of the capital account, it was decided at an executive meeting of the State Council presided over by Premier Li Keqiang. (China Daily)
Circuit breaker set to start in 2016
China will implement the circuit-breaker mechanism in its bourses from next year as part of its efforts to check abnormal price swings in the capital market. According to the rules announced by the Chinese bourses on Friday, trading of stocks, index futures and options will be suspended for 15 minutes when the stock index CSI 300, which tracks some of the largest-cap stocks in Shanghai and Shenzhen, fluctuates by 5 percent. Trading will be halted for the remainder of the day when the index moves by 5 percent after 2:45 pm or 7 percent at any time during the trading session, according to the rules. The market rout between June and August that wiped out $5 trillion of market value has prompted the capital market regulator to consider the circuit-breaker mechanism, which is designed to temporarily halt trading so as to avoid market panic after the stock index has fluctuated a certain percentage. (Xinhua)
China considers policies to encourage overseas business
China will introduce more favorable policies to help domestic enterprises go global, an official from the Ministry of Commerce (MOC) said. The MOC will partner with other ministries to push policies for outbound investment, cooperation among countries participating in the Belt and Road Initiative, encouraging high value-added investments, and improving information services and risk-control measures for overseas businesses, said Zhou Zhencheng, vice director of the Department of Outward Investment and Economic Cooperation under the MOC at a conference. (China Daily)
HKMA - Operational Incidents Watch
The Hong Kong Monetary Authority published the enclosed fourth issue of Operational Incidents Watch. The Operational Incidents Watch is a periodic newsletter to share with the industry the major lessons learnt from selected significant operational incidents that have happened in the banking sector. It aims at facilitating authorized institutions (AIs) or the members of the public in Hong Kong to stay alert and to take appropriate measures to prevent similar incidents from happening to them.
HKMA welcomes RMB's inclusion in the SDR basket
The International Monetary Fund (IMF) announced (1 December) that the IMF Executive Board decided at its meeting on 30 November to include the renminbi (RMB) in the Special Drawing Rights (SDR) basket. HKMA welcomes the IMF's decision.
Hong Kong's Positioning in the Post-QE Era
Speech by Norman T.L. Chan, Chief Executive, Hong Kong Monetary Authority
SFC publishes consultation conclusions on client agreement requirements
All intermediaries' client agreements must comply with the new Code of Conduct requirements, including incorporation of the new clause and observance of the new paragraph 6.5 of the Code of Conduct discussed in the Further Consultation (Note 6), on or before 9 June 2017 (ie, 18 months from issue). The SFC emphasises that the 18-month transitional period is mainly to cater for circumstances where intermediaries, despite their best efforts, encounter practical difficulties when re-executing agreements with existing clients. However, it is expected that intermediaries should be able to comply well before the end of the transitional period.
SFC issues second-quarter report
The Securities and Futures Commission (SFC) published its Quarterly Report summarising key developments from July to September 2015.
SFC proposes to expand short position reporting
The Securities and Futures Commission (SFC) launched a consultation on the scope of short position reporting, which the SFC proposes to extend to all securities that can be short sold under the rules of The Stock Exchange of Hong Kong Limited (SEHK). Under the proposed expanded regime, which will also cover collective investment schemes (CIS), the reporting threshold for stocks will remain unchanged, while the threshold for CIS will be set at $30 million.
Charles Li Direct - HKEx expands product portfolio for future growth
Blog by Charles Li.
MAS - Recent Economic Developments in Singapore, December 2015
The briefing document aims to provide a quick pictorial summary of recent economic developments in the Singapore economy.
MAS - Financial Stability Review (FSR) 2015
The Monetary Authority of Singapore (MAS) conducts regular assessments of risks and vulnerabilities arising from developments in Singapore and the global economy, and assesses their implications for the soundness and stability of Singapore's financial system. The analyses and results are contained in the Financial Stability Review (FSR), which aims to contribute to a greater understanding among market participants, analysts and the public on issues affecting Singapore's financial system.
SGX changes organisational structure to sharpen focus on operational and business priorities
Singapore Exchange (SGX) announced changes to its organisational structure to better serve customers and improve operational efficiency, in line with priorities shared at its Q1 2016 results briefing. The key changes are: Integrating sales and product teams to provide comprehensive client solutions, Deepening international presence in key growth markets and Streamlining technology and operations units.
The Bank of Japan - The Current Situation in Japan's Financial System and Macroprudential Policy
Remarks by Haruhiko Kuroda, Governor of the Bank of Japan
The Bank of Japan - Recent Economic and Financial Developments and Monetary Policy in Japan
Speech by Takehiro Sato, Member of the Policy Board.
Japan Financial Services Agency - Speech by Mr. Nobuchika Mori
The speech outlines Japan's capital market reforms, supervision and inspection of foreign financial institutions in Japan and global regulatory reforms.
RBI - Survey on Computer Software & Information Technology Enabled Services Exports: 2014-15 - Data Release
The survey collects dimensions of the export of software services as per the activity, type of services (on-site/off-site) and country of destination along with the four modes of supply. For the 2014-15 survey round, nearly 7,000 IT companies were contacted of which 1,095 companies, including most of the large companies, responded. The responding companies accounted for around 77 per cent of the total software exports during the year.
RBI - Anti-Money Laundering (AML)/ Combating of Financing of Terrorism (CFT) - Standards
The Financial Action Task Force (FATF) has updated its Public Statement and document 'Improving Global AML/CFT Compliance: on-going process' on October 23, 2015. All Regulated Entities (REs) are advised to take note of the FATF Public Statement and FATF document and be guided accordingly.
SEBI consultation paper for primary market debt offering through private placement on electronic book
SEBI placed an agenda item on introduction of an electronic book for primary market debt offering through private placement before the "Corporate Bonds and Securitization Advisory Committee" (CoBoSAC) meeting held in July 2015. The committee, in-principle, accepted the said proposal and recommended the initiation of public consultation process on the captioned proposal.
SEBI Discussion paper on Review of framework for public issuance of convertible securities
Association of Investment Bankers of India (AIBI) and other market participants had made representations to facilitate issuance of convertible securities through suitable regulatory measures. With a view to revive issuances of convertible securities by existing listed entities and provide an additional avenue for investors to invest as well as companies to raise funds, various issues in this respect were deliberated in the Primary Market Advisory Committee (PMAC) of SEBI. Based on the recommendations of PMAC, various suggestions made in this regard are placed below for public comments.
Sebi likely to bring crowdfunding under regulatory framework
Capital markets regulator Securities and Exchange Board of India (Sebi) is likely to come out with norms to help start-ups raise capital and bring crowdfunding under a regulatory framework in the next few months. Sebi, which had formed a committee called Alternate Investment Policy Advisory Committee under N.R. Narayana Murthy for recommending norms to encourage entrepreneurial activities in India, will submit its report in a month, said Sebi chairman U.K. Sinha at the sidelines of a corporate governance summit organized by Confederation of Indian Industries. (Livemint)
SEBI - Concept paper for issuance of Green Bonds
SEBI released the paper to collect views from various stakeholders. Response deadline: 18 December 2015.
ASIC - Deepening global securitisation markets: An IOSCO perspective
A speech by Greg Medcraft, Chairman, Australian Securities and Investments Commission
APRA proposes revisions to prudential framework for securitisation
APRA's latest proposals incorporate the new Basel III securitisation framework, with appropriate adjustments to reflect the Australian context and APRA's objectives, and will be applicable equally to all ADIs. Subject to consultation on this discussion paper and draft prudential standard, APRA proposes to implement these changes in line with the Basel Committee's effective date of 1 January 2018.
APRA - Future prudential direction of securitisation
Speech by Pat Brennan, General Manager, APRA.
FSC-FSS Meeting for Monitoring Financial Market Conditions
The FSC and the FSS hed a joint meeting this morning to monitor and preemptively respond to internal and external risk factors in financial markets amid rising possibility of the Fed's rate hike at the upcoming FOMC meeting next week.
S. Korea, China agree to implement FTA on Dec. 20
South Korea and China agreed to implement the bilateral free trade agreement (FTA) on Dec. 20, Seoul's foreign ministry said. The two nations continued negotiations to rapidly implement the FTA after Chinese Premier Li Keqiang and South Korean President Park Geun-hye shared views of the implementation within this year on Oct. 31 when the two leaders met in Seoul on the sidelines of the trilateral summit meeting with Japanese Prime Minister Shinzo Abe. (Xinhua)
Banking dispute resolution body to operate next year
The Financial Services Authority (OJK) is completing the establishment of an agency that will take over resolution activities from the financial regulator in disputes between banks and their customers. The agency, the Indonesian Alternative Agency for Banking Dispute Resolution (LAPSPI), will be part of a larger institution called the Indonesian Alternative Agency for Dispute Resolution (LAPS) that will start handling disputes in the insurance and capital market sectors. (Jakarta Post)
BI, OJK team up to enhance debtor database
Bank Indonesia (BI) and the Financial Services Authority (OJK) have agreed to strengthen coordination on the debtor information system (SID) to support the banking industry. The institutions agreed that their coordination would extend to the country's entire financial sector, including the insurance industry, in the future. Full transfer of authority from the central bank to OJK is expected to be completed by Dec. 31, 2017. By then, the system is to be developed into the Financial Industry Service System (SLIK) to cover the whole financial sector, not just the banking industry. (Jakarta Post)
Government prepares decree on shared ICT infrastructure
The government is preparing a ministerial decree to encourage the shared use of information telecommunication technology (ICT) infrastructure to make the industry more efficient. "The decree on the sharing of infrastructure will be issued this month. It will include the sharing of [base transceiver station] towers to develop the industry," Communications and Information Minister Rudiantara said. (Jakarta Post)
Indonesia allows investors to obtain permits through UOB Singapore
The Investment Coordinating Board (BKPM) and United Overseas Bank (UOB) have signed a memorandum of understanding (MOU) allowing UOB's clients to apply for principle licenses in Singapore without having to travel to Indonesia. (Jakarta Post)
Myanmar's stock exchange open, but not for business
There won't be any bell-ringing or celebratory confetti explosions when Myanmar opens its new stock exchange this week. There won't be any stocks to trade either. As Myanmar adjusts to the dizzying pace of its economic reforms and plays catch-up with Asia's high-growth frontier markets, its bid to thrust a once military-run backwater into the global marketplace might be a little premature. Most of the 10 securities firms with conditional licences for trading and underwriting are not yet ready to operate, and when local companies do meet requirements to sell shares, foreign investors will not be allowed to buy them. (Reuters)
FSB publishes fourth EDTF report on bank risk disclosures
The Financial Stability Board (FSB) published two reports and a statement from the Enhanced Disclosure Task Force (EDTF). The 2015 Progress Report on Implementation of the EDTF Principles and Recommendations is the EDTF's fourth report and third progress report on implementation of the EDTF recommendations; it covers 40 global or domestic systemically important banks. The FSB also published an EDTF report on the Impact of Expected Credit Loss Approaches on Bank Risk Disclosures which highlights issues with the implementation of new accounting standards on expected credit loss (ECL). Furthermore, the EDTF provided a statement on the treatment of emergency liquidity provision under the EDTF disclosure recommendations.
CPMI and IOSCO - Implementation monitoring of the PFMI: Assessment and review of application of Responsibilities for authorities
This report presents the findings of the CPMI-IOSCO assessment of the completeness and consistency of frameworks and outcomes arising from jurisdictions' implementation of the Responsibilities for authorities in the Principles for financial market infrastructures (PFMI). The assessments covered implementation of the Responsibilities across all financial market infrastructure (FMI) types in 28 participating jurisdictions. The work on the Responsibilities was carried out as a peer review during 2015. Overall, the assessment revealed that a majority of the jurisdictions had achieved a high level of observance of the Responsibilities. Of the 28 jurisdictions assessed, 16 fully observed the five Responsibilities for all FMI types; an additional two jurisdictions either fully or broadly observed each of the five Responsibilities for all FMI types.
BIS Quarterly Review, December 2015
The BIS Quarterly Review for December 2015 contains reports on international banking and financial market developments and special features.
CFTC Divisions Issue Extension of Time-Limited No-Action Relief from Certain Recordkeeping Requirements under Commission Regulations
The U.S. Commodity Futures Trading Commission's (CFTC) Division of Swap Dealer and Intermediary Oversight and Division of Market Oversight issued a no-action letter extending the relief in CFTC Staff Letter No. 14-147 (Letter 14-147), which is set to expire on December 31, 2015. Letter 14-147 provides that commodity trading advisors that are registered with the CFTC and are members of designated contract markets or of swap execution facilities are not required to record oral communications.
EBA benchmarks approaches on scenarios in recovery plans
The European Banking Authority (EBA) published a comparative report on the approaches taken by a sample of European banking groups on scenarios in recovery plans. This benchmarking exercise is aimed at supporting national competent authorities and institutions by providing them with an overview of how scenarios included in recovery plans have been developed so far.
EBA launches consultation on FINREP using IFRS 9
The European Banking Authority (EBA) launched a consultation on the reporting of financial information for institutions using IFRS (FINREP IFRS). The proposed amendments follow the finalisation of IFRS 9 by the IASB in July 2014 and aim at collecting early industry views on changes that IFRS 9 would trigger to FINREP. This consultation is distinct from the on-going IFRS 9 endorsement process and does not relate to financial information reported by institutions using national generally accepted accounting practices (GAAP). The consultation will run until 8 March 2016.
EBA provides assessment of banks Pillar 3 reports for 2015
The European Banking Authority (EBA) released its assessment of the annual Pillar 3 reports of a sample of European banks, which relate to the 2014 financial year. This is the first report since the entry into force of the Capital Requirements Regulation (CRR) that assesses banks' compliance against the disclosure requirements laid down in CRR.
EBA reports on the publication of administrative penalties on an anonymous basis
The European Banking Authority (EBA) released a report reviewing the publication by competent authorities, on an anonymous basis, of administrative penalties imposed for breach of the national provisions transposing the Capital Requirements Directive (CRD) or of the Capital Requirements Regulation (CRR). The report also includes links to the websites of competent authorities where such sanctions are published and makes recommendations to enhance harmonisation in terms of disclosure and facilitate access to information. The EBA also published a list of links to each competent authority's publication of such administrative penalties, which will be updated on a regular basis.
ESMA - European swap clearing to start in June 2016
Firms will have to centrally clear certain classes of interest rate swaps starting from 21 June 2016. The clearing obligation in the Europe Union (EU) will enter into force following the publication of the relevant technical standards in the Official Journal on 1 December 2015. This marks an important milestone in implementing the EU's post-financial crisis' derivatives regulation - the European Market Infrastructure Regulation (EMIR) - and follows the G20 commitment to clear all standardised OTC derivative contracts, where appropriate, through central counterparties (CCPs).
ESMA publishes Final Report on Guidelines on complex debt instruments and structured deposits in MiFID II
The European Securities and Markets Authority has published the Final Report on guidelines on complex debt instruments and structured deposits. These guidelines are intended to enhance investor protection by identifying complex financial instruments and structured deposits for which the provision of so-called execution-only services is not possible (i.e. the firm has to ask information on client's knowledge and competence in order to carry out an appropriateness test).
ESMA publishes updated Q&A on AIFMD
The European Securities and Markets Authority (ESMA) has published updated questions and answers on the application of the AIFMD.
The Q&A includes new questions and answers on reporting to national competent authorities.
ESAs seek stakeholder input on automation in financial advice
The Joint Committee of the three European Supervisory Authorities (ESAs) - EBA, EIOPA and ESMA - has launched a Discussion Paper on automation in financial advice, aimed at assessing what, if any, action is required to harness the potential benefits of this innovation and mitigate its risks.
The ESAs have seen, with the increasing digitalisation of financial services, a growing number of financial institutions offering automated tools when providing advice or recommendations to consumers, often referred to as robo-advisors. These could potentially change the way consumers and financial institutions interact when buying or selling financial products.
EU Council - Letter by President Donald Tusk to the European Council on the issue of a UK in/out referendum
The letter informs where the EU Council stands on the issue of a UK in/out referendum before it is addressed at the December European Council.