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ASIFMA Asia Regulatory Review

6 - 12 April 2016 | Issue 294


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!

3rd Annual Symposium on EU-Asia Relations in Financial Services to be held on 25-27 May 2016 in Beijing
This closed-door symposium on EU-Asian capital markets regulation provides a unique opportunity for European and Asian policy makers, high-level industry influencers, leading academics and markets representatives to meet and discuss important issues impacting the functioning of EU Asian trade, investment and capital markets. The event is limited to 100 participants. Register now given seats are limited!



China revises risk management rules on securities firms
China's securities regulator is seeking to revise its risk management rules on securities firms to adapt to new changes in the industry. The China Securities Regulatory Commission (CSRC) released its draft plan to change the way it calculates net capital and risk capital requirement of securities firms. It also plans to adjust the indicators for leverage and liquidity regulation of the industry. The revised calculation will see the industry's net capital increase by around 20 percent and that of risk reserve capital rise two times, which will make the risk coverage indicator more "reasonable," according to the CSRC. (Xinhua)


HKMA - "Hong Kong" And "Belt and Road Strategy"
Presentation slides used during Norman T.L. Chan speech, Chief Executive, Hong Kong Monetary Authority.

HKMA - Feedback from recent reviews of the selling of investment products
HKMA shared key observations and practices identified in the course of their supervisory work in relation to Authorized Institutions' (AIs') selling of investment products. HKMAs recent supervisory experience revealed that while AIs in general had put in place policies and procedures to govern business conduct in the selling of investment products, some issues and good practices identified warrant further attention by AIs. Details are set out in the Annex.

HKMA - Supervisory Policy Manual (SPM): CA-G-5 Supervisory Review Process
The revised SPM module contains updated text relating to the implementation of the Basel III capital buffers. In particular, the explanation of the interaction between the Pillar 2 capital requirements derived from the Pillar 2 supervisory review process, and the Pillar 1 buffer level prescribed under the Banking (Capital) Rules, has been refined.


New Cybersecurity Bill to be tabled next year to strengthen Singapore's online defenses
A new Cybersecurity Bill that aims to strengthen laws against online crime will be tabled in Parliament next year (2017). Minister for Communications and Information Yaacob Ibrahim told Parliament the proposed law will ensure that operators of Singapore's critical information infrastructure take active steps to secure such systems and report incidents. It will also empower the Cybersecurity Agency (CSA) to manage cyber incidents and raise the standards of cyber security providers, he said during the debate on his ministry's Budget. (Straits Times)


The Bank of Japan - Establishment of the Global Financial Partnership Center (GLOPAC)
The Financial Services Agency of Japan ("FSA") established the Global Financial Partnership Center ("GLOPAC"), as a successor organization of the Asian Financial Partnership Center ("AFPAC") launched in April 2014. The objectives of the GLOPAC are to address the issues related to the global financial markets, to effectively conduct financial sector technical assistance for infrastructure development, and to further strengthen cooperative relationships with financial authorities around the world.

JFSA - Statement of the Minister for Financial Services on Financial System Council's discussion about various issues in Japanese markets and exchanges
The JFSA will review the impact of high-speed trading upon the efficiency, transparency and stability of the markets. Additionally JFSA highlights the need to hold discussions on Fintech solutions in order to enhance the competitiveness of our markets.


RBI - First Bi-monthly Monetary Policy Statement, 2016-17
By Dr. Raghuram G. Rajan, Governor, RBI.

SEBI officers discuss agenda for future in the Annual Brainstorming Session
This year's program was carefully designed to meet three broad objectives i.e. i) reflect on and rediscover SEBI's near, medium and long term agenda ii) develop leadership and team building in the organization iii) build awareness about the upcoming new campus of National Institute of Securities Market (NISM) and generate ideas about scaling up its profile and activities in the areas of capacity building and financial literacy. Cross functional teams headed by Chief General Managers made stimulating presentations which were followed by engaging discussion generating useful suggestions on a wide variety of topical issues.

NSE seeks Sebi approval for commodity futures trade
Leading bourse National Stock Exchange (NSE) has sought capital markets regulator Sebi's approval for launching a commodity futures trading segment. "We are exploring the possibilities in commodities derivative segment. Recently, we have written to Sebi. We expect to hear from them soon about broader framework among other things," a NSE spokesperson said. If exchanges are permitted in the segment, it will bring down cost and time as the bourses already have the necessary technology platform and risk management framework in place. (Economic Times)


APRA pushes bank boards to define, improve risk culture

The Commonwealth Bank of Australia board will provide the banking regulator with its definition of the bank's risk culture and a plan to improve standards. The move is in response to an industry-wide drive by the Australian Prudential Regulation Authority to make bank directors assume responsibility for improving bank conduct in the wake of a series of damaging scandals. Other banks have or will provide APRA with the same information, after APRA introduced in January last year its so-called prudential standard CPS 220, which requires boards to form a view of the bank's risk culture and to identify changes to it that could improve behavior. (Sydney Morning Herald)

ASIC talking to Singapore on fintech deal
The Australian Securities and Investments Commission is talking to the Monetary Authority of Singapore about an agreement to ensure that regulation does not hinder the progress of fintech start-ups looking to operate across the countries' borders. Fintech regulation has been a key agenda item at recent meetings of peak financial regulators across the globe and although the discussions between ASIC and MAS are at an early stage, it is understood both regulators are enthusiastic about seeing a deal come to fruition. (Australia Financial Review)


Bank Indonesia - Financial Markets Development and Deepening to Support National Development Financing
The Ministry of Finance, the Minister of Finance, the Governor of Bank Indonesia, and the Chairman of the Board of Commissioners of the Financial Services Authority signed a Memorandum of Understanding (MoU) on Coordination in the Context of Financial Markets Development and Deepening to Support National Development Financing. The Signing of this MoU is driven by the need for 1) sufficient development financing, 2) financial markets deepening, and 3) good coordination among related institutions.

OJK wants bank asset to GDP ratio at 75% within 5 years
The Financial Services Authority (OJK) wants to increase the ratio of bank assets to gross domestic product (GDP) by five percent per year through financial market expansion. In the next five years, the ratio is expected to reach 75 percent. OJK chairman Muliaman Hadad said the OJK and the central bank would increase the variety of long-term securities. He predicted that financial expansion would help the ratio grow by five percent a year. (Jakarta Post)


ASEAN capital market regulators roll out initiatives under ACMF's new 5-year roadmap
The ASEAN Capital Markets Forum (ACMF) approved the ACMF Annual Implementation Plan 2016 (Annual Plan 2016), which sets out ACMF's immediate priorities for the year. This Annual Plan 2016 was developed based on the earlier approved ACMF Action Plan 2016-2020 (Action Plan) which will be presented to the ASEAN Finance Ministers at the upcoming meeting in April 2016 for endorsement. The Action Plan will drive the ACMF's objective of achieving an inter-connected, inclusive and resilient ASEAN capital market, to help realize the ASEAN Economic Community Vision 2025 of deepening economic integration over the next ten years.

IOSCO Issues Study of Regulatory Approaches and Tools to Deal with Cyber Risk
The report, "Cyber Security in Securities Markets - An International Perspective," provides a review of the different regulatory approaches related to cyber security and the potential tools available to regulators to respond to the cyber risk. The report also describes some of the practices adopted by market participants. The work was coordinated by the Quebec Autorite des marches financiers, with the assistance of the Singapore MAS and the China CSRC.

BIS - Tenth progress report on adoption of the Basel regulatory framework
The report focuses on the status of adoption of all the Basel III standards (which will become effective by 2019) to ensure that the Basel standards are transformed into national law or regulation according to the internationally agreed timeframes. The report is based on information provided by individual members as part of the Committee's Regulatory Consistency Assessment Programme (RCAP).

BIS - Revisions to the Basel III leverage ratio framework - consultative document
This document sets out the Committee's proposed revisions to the design and calibration of the Basel III leverage ratio framework. Among the areas subject to proposed revision in this consultative document are: measurement of derivative exposures; treatment of regular-way purchases and sales of financial assets; treatment of provisions; credit conversion factors for off-balance sheet items; and; Additional requirements for global systemically important banks. The final design and calibration of the proposals will be informed by a comprehensive quantitative impact study.

BIS - Payment aspects of financial inclusion
The Committee on Payments and Market Infrastructures and the World Bank Group issued the final report on Payment aspects of financial inclusion. This builds on an earlier version of the report that underwent public consultation in late 2015 and seeks to tackle barriers to the adoption and usage of transaction accounts, which sit at the heart of retail payment services.

IMF - Emerging Markets Show More Resilience to Capital Flow Cycle
A new study, published in the IMF's April 2016 World Economic Outlook report, takes a closer look at more than 40 emerging market economies to understand the drivers of declining capital flows since 2010.


Federal Reserve Board proposes technical amendments to rule requiring global systemically important bank holding companies to hold additional amounts of risk-based capital
The final rule established the criteria for identifying a firm as a GSIB and the methodology a GSIB is required to use to determine its risk-based capital surcharge, which corresponds to the systemic risk of that firm. The proposed amendments clarify that GSIBs must continue to calculate their surcharges using year-end data, while their related surcharge data will be reported on a quarterly basis.

US Treasury - America and the Global Economy: The Case fo U.S. Leadership
Remarks by Treasury Secretary Jacob J. Lew Remarks at Council on Foreign Relations.

CFTC's Division of Market Oversight Issues Time-Limited No-Action Relief Regarding Masking Certain Information Reportable under the OCR Final Rule
The OCR Final Rule requires the electronic submission of trader identification and market participant data on new and updated reporting forms. CFTC Letter 16-33 permits reporting parties with reporting obligations on OCR Forms 102A and 102B to mask certain identifying information, subject to conditions, until the earlier of: a reporting party no longer holding the requisite reasonable belief regarding the privacy law consequences of reporting; and March 1, 2017.

CFTC's Division of Market Oversight Issues Further Actions Concerning Implementation of the Ownership and Control (OCR) Final Rule
CFTC Letter 16-32 provides an implementation schedule of no-action relief, extending to dates ranging from September 28, 2016 to April 29, 2018.


ESAS identify vulnerabilities affecting the EU financial system and suggest actions to address the main risks
The Joint Committee of the European Supervisory Authorities (EBA, EIOPA, ESMA - ESAs) published today its Spring 2016 Report on Risks and Vulnerabilities in the EU Financial System. The Joint Committee highlights three main risks affecting the European financial system and suggests a set of policy actions to tackle those risks: 1) Low profitability of financial institutions in a low yield environment. 2) Increasing interconnectedness of bank and non-bank entities. 3) Potential contagion from China and other emerging markets.

EBA updated Risk Dashboard shows EU banks have further increased their capital ratios in Q4 2015
The European Banking Authority (EBA) published the periodical update of its Risk Dashboard summarizing 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 in Q4 2015. The update shows a further increase in EU banks' capital ratios. Profitability remains low and NPL ratios are still high.

EBA consults on draft amending standards on CVA proxy spread
The European Banking Authority (EBA) launched a public consultation on draft amending Regulatory Technical Standards (RTS) on credit valuation adjustment (CVA) proxy spread. These RTS propose limited amendments to Commission's Delegated Regulation (EU) No 526/2014 based on two policy recommendations contained in the EBA's CVA report published on 25 February 2015. Through the proposed amendments the EBA expects to ensure a more adequate calculation of own funds requirements for CVA risk. The consultation runs until 06 July 2016.

EBA and EIB Group to promote discussion on synthetic securitization and credit guarantees
On 31 May 2016, the European Banking Authority (EBA), jointly with the European Investment Bank Group (European Investment Bank and European Investment Fund), will host a seminar at the EBA premises to discuss opportunities and challenges on the role and potential use of credit guarantees and synthetic securitization in the banking sector.

ESMA publishes responses to the consultation on guidelines on transaction reporting, reference data, order record keeping & clock synchronization
This consultation paper seeks stakeholders' views on the draft guidance on the application of the provisions of the ESMA RTS on transaction reporting, instrument reference data, order record keeping and clock synchronization (RTS 22, 23, 24 and 25). This guidance complements the technical standards and will be essential for the consistent implementation of the new MiFIR rules.

The European Council - Data protection reform: Council adopts position at first reading
The Council adopted its position at first reading on data protection reform, which paves the way for the final adoption of the legislative package by the European Parliament at its plenary session in April. Data protection reform is a legislative package aimed at updating and modernizing existing data protection rules. It includes two legislative instruments: the general data protection regulation (intended to replace directive 95/46/EC) and the data protection directive in the area of law enforcement (intended to replace the 2008 data protection framework decision).

The Bank of England - Appointment of new Deputy Governor for Prudential Regulation
HM Treasury announced that Her Majesty The Queen has agreed, on the recommendation of the Chancellor and Prime Minister, to appoint Sam Woods as Deputy Governor for Prudential Regulation and Chief Executive of the PRA.

FCA - Electronification of trading
Speech by Edwin Schooling Latter, Head of Markets Policy, FCA. Issues raised: Electronification and volatility - is there a link?; and What role does market microstructure have in reducing price volatility?


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