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ASIFMA Asia Regulatory Review

6 - 13 OCTOBER 2015 | Issue 273


The Asia Regulatory Review will take a short break and will return on 27 October 2015.

Job Opening at ASIFMA: Executive Director, Head of Policy and Regulatory Affairs
ASIFMA is now seeking an Executive Director, Head of Policy and Regulatory Affairs. Further details can be found here. Applications are due by October 23.

ASIFMA Structured Finance Conference to be held on 15 October 2015 in Hong Kong
ASIFMA's signature conference provides an industry-wide and timely platform for policy-makers, central banks and leading market practitioners including sell side and buy side to discuss the development of the structured finance markets as a key aspect of Asian Securitization and Covered Bonds in the region and globally. Register now given seats are limited!



China launches international payment system
The first phase of China International Payment System (CIPS) was officially launched Thursday in Shanghai, a milestone in the internationalization of the Chinese currency, the renminbi or yuan. The system, which provides capital settlement and clearing services for cross-border yuan transactions for financial institutions domestically and abroad, will enhance efficiency and increase global use of the Chinese currency by cutting costs and processing times, said Fan Yifei, vice president of the People's Bank of China, the central bank. CIPS will have a significant role in shoring up China's real economy and promoting the "going abroad" strategy of domestic enterprises, said Fan. (Xinhua)

China Wants to Make Currency Policy 'More Market-Oriented,' PBOC's Yi Says
A top Chinese official sought to allay fears of a deep economic slowdown in China, saying continued growth would stabilize the country's currency and allow the central bank to let it move according to market forces. A hands-off approach could cause more depreciation in the yuan, also known as the renminbi, should the Chinese economy weaken further. But Yi Gang, the People's Bank of China's deputy governor, said such "fundamentals" as China's strong trade surplus would ensure the yuan's strength. (WSJ)

CSRC and relevant exchanges consult on draft rules for programme trading on securities and futures markets
The China Securities Regulatory Commission (CSRC) has published the 'Administrative Measures for Programme Trading on Securities and Futures Markets (Consultation Draft)'. The draft measures are intended to regulate programme trading on securities and futures markets. The consultation period will end on 8 November 2015. Summary of the consultation draft:

  • programme trading is broadly defined as trading on orders automatically generated or executed through a designated procedure or particular software;
  • to the extent clients of securities/futures companies intend to conduct programme trading, they shall report the relevant information (as well as any change to such information) beforehand, including their identity, strategy, technical configuration parameters of the programme trading systems, location of server and contact person, to the securities/futures companies which accept their programme trading entrustment;
  • domestic programme traders engaging in securities and futures trading shall not make trading orders through trading systems installed offshore, or connect onshore trading systems with offshore computers and subject onshore trading systems to the remote control of offshore computers;
  • unless otherwise provided by the CSRC, a programme trader shall only use one account for programme trading; and
  • the CSRC may, based on the needs for regulation and enforcement, require programme traders to provide the source code of their trading programme, detailed explanations of their trading strategy and other relevant materials.

CSRC holds hearing for illegal stocks operations
China Securities Regulatory Commission (CSRC) held a two-day hearing for 11 illegal cases of reducing share holding. It was the first time that the CSRC dealt with cases involving such amount of illegal share-holding reductions in one hearing. The regulator asked big shareholders of public companies not to sell shares in an effort to keep the market stable in the past months. (Xinhua)

Draft EU rules pose threat to London's China finance ambitions
Concerns are mounting in the City of London that proposed European rules will stymie efforts to make Britain the principal offshore base for Chinese finance. Europe's banking and markets watchdogs are set to present an updated version of the draft standards on swaps trading by the end of this year, and banks are warning that they will be prevented from trading certain types of derivatives with counterparties based in China. (FT)


Government committed to timely implementation of AEOI in Hong Kong
The Government will, in the light of stakeholders' views collected during consultation, refine the legislative proposals for implementing in Hong Kong the new international standard on Automatic Exchange of Financial Account Information in Tax Matters (AEOI), a government spokesman said.

HKMA - Consultation response on establishment of an effective resolution regime for financial institutions in Hong Kong
The Government and the financial regulators released a consultation response to the second stage of public consultation on proposals to establish a cross-sector resolution regime for financial institutions (FIs), including financial market infrastructure, in Hong Kong. The consultation response summarises the respondents' views on the proposals, and sets out the Government's responses along with its refined policy positions on certain aspects of the proposed resolution regime. The Secretary for Financial Services and the Treasury, Professor K C Chan, said, "We are pleased to note that the majority of respondents to the second stage of public consultation continued to be supportive of the proposals to establish an effective local resolution regime in line with the latest international standards set by the Financial Stability Board."

HKMA - Complaints Watch
The Hong Kong Monetary Authority (HKMA) published the fifth issue of Complaints Watch. Complaints Watch is a periodic newsletter to share with the banking industry information on complaints received by the HKMA. It highlights the latest complaint trends, emerging topical issues, and areas that authorized institutions (AIs) may wish to place greater focus on. It forms part of the HKMA's work to promote proper standards of conduct and prudent business practices among AIs.

HKMA - Anti-Money Laundering Seminars 2015
The HKMA informs they will host anti-money laundering seminars on 3 and 5 November 2015. The purpose of the seminars is to provide authorized institutions (AIs) with the latest regulatory developments on anti-money laundering and counter-terrorist financing (AML/CFT) and the supervisory expectations on assessment of money laundering and terrorist financing risks. Speakers will be from the HKMA and the industry. Compliance Officers, Money Laundering Reporting Officers or other managing staff with the responsibility to implement AML/CFT systems should attend the seminars.

SFC launches pilot initiatives to enhance fund authorization process
The Securities and Futures Commission (SFC) announced the launch of new initiatives to further enhance the authorization process for new fund applications (Revamped Process) and for new Mandatory Provident Funds (MPF) and Pooled Retirement Fund (PRF) products. Both initiatives will be implemented on 9 November 2015 for a six-month pilot period after which refinements may be made before the initiatives will be adopted as policy.

SFC - Ashley Alder - Speech at 6th Pan-Asian Regulatory Summit
The speech addresses the SFCs work on extending Hong Kong's lead as an Asian asset management centre; to promote alternative distribution channels for retail mutual funds; changing the way in which the SFC conducts surveillance in public markets; working with the Stock Exchange on listing regulation; working with the Hong Kong Monetary Authority on a number of joint projects, including ways in which the SFC can enhance oversight of wholesale securities markets activity carried on by banks; and continue to be unrelenting in the pursuit of remedial outcomes in enforcement work.

Hong Kong's SFC chairman says no room for delay in OTC derivatives reform
Carlson Tong said regulatory reform must follow the global schedule, despite market push back from industry objecting to limited time for proper consultation (SCMP)

Hong Kong shares regulator reveals plans to bolster information sharing with Beijing
The Hong Kong regulatory authority will strengthen information sharing and cooperation with mainland China's securities watchdog although people are raising questions about it, said Ashley Alder, Hong Kong Securities and Futures Commission (SFC) chief executive. Alder's statement came after Beijing upgraded its fight against market misconduct it has blamed for the sustained market rout since shares in China hit a 7-year top in mid-June. (SCMP)

HKEx Plans to Introduce More Asia Commodities Contracts
HKEx plans to introduce its second group of London Metal Mini Futures contracts - London Nickel Mini Futures, London Tin Mini Futures and London Lead Mini Futures, pending regulatory approval and market readiness. A timetable will be announced in due course.

HKSA and HKEx in talks to introduce a centralised fund platform
The Hong Kong Securities Association (HKSA) is holding talks with Hong Kong Exchange and Clearing Limited (HKEx) to evaluate the possibility of launching a centralised fund platform. HKSA Chairman Benny Mau told local media that the new platform, if approved, would predominately offer a window for subscriptions and redemptions in the primary market, and potentially be expanded to the secondary market, given time. He also said the initiative would be expected to improve transparency on trading volumes, pricing, and fund performances, and added that it could lower fund distribution costs, especially for northbound funds under the Mutual Recognition of Funds (MRF) scheme. (Asia Asset)


MAS Consultation Paper on Proposed Amendments to MAS Notice 637 to Implement Revisions to the Basel III Capital Framework
This consultation paper sets out MAS' proposed amendments to MAS Notice 637 on Risk Based Capital Adequacy Requirements for Banks Incorporated in Singapore ("the Notice"), to implement requirements for Singapore-incorporated banks that are consistent with the final standards issued by the BCBS. The proposed amendments are intended to take effect from 1 January 2017, other than the proposed amendments to Part XI of the Notice. Singapore-incorporated banks are to publish their first standalone Pillar 3 report which complies with the revised disclosure requirements, from the date of publication of their first set of financial statements relating to a balance sheet on or after 31 December 2016. MAS invites comments from Singapore-incorporated banks and other interested parties. Submission deadline: 4 December 2015.

MAS - Consultation Paper on Liquidity Coverage Ratio Disclosure Requirements
In November 2014, MAS issued Notice 649 to update our liquidity regulations for banks. In particular, the Liquidity Coverage Ratio ("LCR") requirement was introduced for domestic systemically important banks in Singapore ("D-SIBs"). MAS is hereby consulting on a set of proposed disclosure requirements to complement the LCR requirement. The proposed LCR disclosure requirements are intended to take effect from 1 January 2016, with banks being required to comply with these disclosure requirements from the date of the first reporting period after 1 January 2016. Response deadline: 9 Nov 2015.

MAS - Ravi Menon: Macroeconomic Stability and Financial Stability - Uncomfortable Bedfellows?
Speech by Mr Ravi Menon, Managing Director, Monetary Authority of Singapore.

SGX reviewing companies' compliance with Corporate Governance Code
Singapore Exchange (SGX) is carrying out a review of how listed companies abide by the "comply or explain" requirement for principles and guidelines of the Singapore Code of Corporate Governance (CG Code). The review is part of SGX's drive to raise governance standards of listed companies and follows the introduction of a Disclosure Guidance document in January 2015 to help companies comply with key aspects of governance.


The Bank of Japan - Full Launch of the BOJ-NET

The Bank of Japan confirmed that the full launch of the new Bank of Japan Financial Network System (BOJ-NET) will take place on October 13, 2015, as scheduled. Financial institutions using the BOJ-NET will improve their collateral and cash management efficiency and promote smoother settlement of JGBs. With regard to the extension of the operating hours of the new BOJNET, the Bank plans to extend the operating hours up to 9pm from February 15, 2016. The new BOJ-NET has the following three main features. 1. Use the latest information technology. 2. Have high flexibility to adapt to changes in financial services and various needs. 3. Enhance accessibility to cope with changes in the financial environment such as globalization of financial transactions and networking of settlement infrastructures.

The Bank of Japan - Amendment to "Guidelines on Eligible Collateral"
At the Monetary Policy Meeting, the Policy Board of the Bank of Japan made the following decisions based on a regular review of the appropriateness of collateral prices and margin ratios in light of recent financial market developments, with a view to maintaining the soundness of the Bank's assets as well as efficiency in market participants' use of collateral.


RBI - Indian Banking Sector - A Regulatory Perspective
Keynote address delivered by Shri S. S. Mundra, Deputy Governor, Reserve Bank of India

BSEC approves draft act on Clearing and Settlement Company
The securities regulator has finalised the draft act aiming to establish a separate clearing settlement and company for both the bourses, officials said. The draft has incorporated a provision, among others, for formation of an 11-member board for the proposed Clearing and Settlement Company. "The commission approved the draft act finalised based on two reports. Now we will seek opinions from stakeholders on it," a senior official of the Bangladesh Securities and Exchange Commission (BSEC) told the FE. (Financial Express)


ASIC - Derivative transaction reporting - Commencement of Phase 3B reporting
ASIC has been monitoring industry's readiness to meet trade reporting obligations. They are aware that following the making of the Corporations Amendment (Central Clearing and Single-Sided Reporting) Regulation 2015 some entities have revised business decisions about whether they can rely on single-sided reporting or whether to establish other trade reporting arrangements, such as delegated reporting. As such, some of these entities may not have completed the steps needed to meet their reporting obligations for the 12 October 2015 start date. In light of this, ASIC has extended the commencement date for phase 3B reporting to 4 December 2015. The extension should provide sufficient time, for those who require it, to put in place final arrangements for the last phase of trade reporting in Australia.

ASIC report on market integrity
ASIC achieved 11 significant enforcement outcomes relating to market misconduct in the first six months of this year. Details of these and other achievements feature in Report 450: Market integrity report: 1 January to 30 June 2015, along with key priorities for market integrity for the rest of 2015. The report has been released in a new format, consisting of a three minute video and webpage highlighting significant market integrity outcomes achieved through ASIC's supervisory, surveillance and enforcement activities.

RBA - Low Interest Rate Environments and Risk
Speech by John Simon, Head of Economic Research.


Bank Negara Malaysia - Guidelines & Circulars listing on Bank Negara Malaysia's website
The Bank finalised the revision to the Capital Adequacy Framework (Capital Components) and Capital Adequacy Framework (Basel II - Risk-Weighted Assets), and the Capital Adequacy Framework for Islamic Banks (Capital Components) and Capital Adequacy Framework for Islamic Banks (Risk-Weighted Assets).


FT View: Europe's costly judgment on data protection
Scrapping the 'safe harbour' deal will damage transatlantic trade. (FT)


FSB Chair's Letter to G20 on Financial Reforms - Progress on the Work Plan for the Antalya Summit
The FSB Chair's letter updates G20 Finance Ministers and Central Bank Governors on progress in advancing the FSB's 2015 agenda.

IOSCO continues to reinforce its position as key global reference point for markets regulation
The Board of the International Organization of Securities Commissions (IOSCO) met in Toronto to reinforce IOSCO's position as the key global reference point for financial services and markets regulation. The Board discussion during the two-day meeting focused on three sets of activities in key priority areas as identified in the IOSCO 2020 Strategic Direction: Identifying and responding through guidance to global market risks; providing assistance to IOSCO members and supporting the G20 efforts to promote stability in the global financial system.

OECD presents outputs of OECD/G20 BEPS Project for discussion at G20 Finance Ministers meeting
The OECD presented the final package of measures for a comprehensive, coherent and co-ordinated reform of the international tax rules to be discussed by G20 Finance Ministers at their meeting on 8 October, in Lima, Peru. The OECD/G20 Base Erosion and Profit Shifting (BEPS) Project provides governments with solutions for closing the gaps in existing international rules that allow corporate profits to - disappear - or be artificially shifted to low/no tax environments, where little or no economic activity takes place.

Industry agrees to global guidelines for intraday liquidity reporting
SWIFT announced that the Payments Market Practice Group has endorsed the use of its messages for intraday liquidity reporting as required by the Basel Committee on Banking Supervision (BCBS). SWIFT's messages for intraday liquidity reporting underpin a rulebook created by the Liquidity Implementation Task Force (LITF) to support compliance with BCBS requirements. Following community-wide consultation, the PMPG has made the decision to endorse the LITF guidelines, helping to ensure broad industry adoption.


European Parliament - Opening up the online payments market, so as to reduce fees and fraud risks
Updating EU rules on payment services will cut the cost of paying bills, by enabling new market players to use mobile and online tools to make payments on a client's behalf, said MEPs voting a law to this end on Thursday. These rules, informally agreed by MEPs and ministers last May, also aim to make online payments safer, by laying down data protection and liability rules for all online payment service providers.

ESAs set out joint work plan for 2016
The Joint Committee of the European Supervisory Authorities (EBA, ESMA and EIOPA) published today its Work Programme for the upcoming year. Throughout 2016, the Joint Committee will continue to give high priority to Consumer Protection and Cross-Sectoral Risk Analysis.

ESMA sets out its priorities for 2016
The European Securities and Markets Authority (ESMA) has published its 2016 Work Programme which sets out its priorities and the activities it will undertake in pursuit of its statutory objectives of enhancing investor protection and promoting stable and orderly financial markets. ESMA's priorities for 2016, in line with the recently published ESMA Strategic Orientation 2016-2020, signals a shift from rulemaking towards implementation and promoting the convergence of supervisory practices. The key priorities for 2016 focus on: Supervisory Convergence; MiFID II and MiFIR; and Data collection and management

ESMA - Steven Maijoor to ECON Scrutiny Hearing on AIFMD Passport
Mr. Maijoor in his submission to the hearing outlined the background to ESMA's work on their opinions in relation to third-country regimes including the key areas ESMA will now work on in relation to the issue. These are: ESMA will continue its assessment of Hong Kong, Singapore and the US with a view to reaching a definitive conclusion on whether to extend the passport to those countries; It will start to assess a second group of non-EU countries, namely Australia, Canada, Japan, the Cayman Islands, the Isle of Man and Bermuda; It will focus on putting in place the extensive framework foreseen by the co-legislators in case the passport is indeed extended to one or more non-EU countries. This last element includes making preparations for ESMA's role in the functioning of the passporting system and the strengthened supervisory cooperation that will be crucial to its success.

EBA extends deadlines for comments on templates and instructions of the QIS on the definition of default
In response to requests received from representatives of the industry, the EBA has decided to extend the period for expressing views and comments on the templates and instructions of the Qualitative Impact Assessment (QIS) on the definition of default by Monday 19 October 2015.

The Bank of England - Strengthening accountability in banking and insurance: regulatory references
Employment references that pass between firms when individuals move roles (in this consultation paper (CP) 'regulatory references') are an important tool for employers in assuring themselves that they are hiring the right people. This consultation forms part of the wider package of reforms that aim to improve accountability in relevant authorised persons (RAPs) and insurers. Response deadline: 7 December 2015.

Europeans move to undercut global bank capital rules
Several European countries are taking action to water down new global capital rules for their biggest financial institutions, causing concern among investors and EU officials. France is set to become the latest country to introduce legislation that would save its leading banks from having to issue tens of billions of euros of bonds to meet the rules agreed by global regulators a fortnight ago, people familiar with the situation said. Italy and Germany have begun similar processes. Brussels officials are so worried with the divergence in policies that they have started talks with EU countries on a more co-ordinated stance, two EU officials said. Market insiders said investors were frustrated and that all banks could end up paying more when they issue debt. (FT)


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