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ASIFMA Asia Regulatory Review

8 - 15 March 2016 | Issue 290


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!



No circuit breaker in the next several years: China securities regulator
China will not relaunch the circuit breaker mechanism in its stock market in the next several years, Liu Shiyu, head of the securities regulator, said. In January, the circuit breaker mechanism, which halts trading when stock prices rise or fall by a certain percentage with intention of reducing volatility, was withdrawn abruptly after it panicked investors instead. (Xinhua)

China to push IPO registration reform gradually: CSRC
China will press ahead with IPO registration system reform in a gradual manner as it takes time to work out related reform, the country's securities regulator said. The IPO registration system reform is a set target that must be achieved for China, but its pace would depend on the development of capital market and legal conditions, Liu Shiyu, chairman of the China Securities Regulatory Commission (CSRC), said at a press conference. (Xinhua)

Too early to talk about exit of CSF: CSRC chief
China's securities regulator chief said that it is too early to talk about when China Securities Finance Corporation Limited (CSF) will exit from the market. Liu Shiyu, chairman of the China Securities Regulatory Commission (CSRC), made the remarks at a press conference on the sidelines of the annual parliamentary session. CSF, the national margin trading service provider, played a major role in the government's efforts to rein in market swings last summer. However, Liu said market-stabilizing measures rolled out by authorities during the turmoil will be canceled when the market fully recovers. (Xinhua)

Banking regulator vows to get tough on online brokers
China's top banking regulator has vowed to crack down on illegal fundraising activities by unscrupulous online brokers and warned investors to be wary of their schemes. Shang Fulin, chairman of the China Banking Regulatory Commission, said at a news conference: "The CBRC will strengthen regulation, intensify on-site inspections and step up administrative penalties." Shang said illegal fundraising cases have become so common and the perpetrators are finding new ways to commit their crimes.(China Daily)


HKEX Publishes its Annual Fact Book
HKEX Fact Book 2015 presents a wide range of statistics from HKEX's securities and derivatives markets as well as the London Metal Exchange, which HKEX acquired in December 2012. It also includes market highlights in 2015 and a section on the history of Hong Kong's securities and derivatives markets since the late 1800s.

Hong Kong Plans to Uncloak Investors With See-Through System
Hong Kong's financial markets watchdog will be able to identify investors behind the trades they are making in real time with a plan to require identification codes. The Securities and Futures Commission, which currently can monitor live trading only at the broker level, is developing policies and data protection measures for the new system, said Keith Lui, executive director for market supervision at the agency. The agency will consult banks and brokerages on the plan prior to implementation, he said. (Bloomberg)


People's Bank of China and Monetary Authority of Singapore Renew Bilateral Currency Swap Arrangement
The People's Bank of China (PBC) and the Monetary Authority of Singapore (MAS) announced the renewal of the existing bilateral currency swap arrangement (BCSA) for a further term of three years. The original arrangement was established in 2010 and first renewed in 2013. The new arrangement is effective as of 7 March 2016.


The Bank of Japan - Japan's Economy, Price Developments, and Monetary Policy
Speech by Koji Ishida, Member of the Policy Board

The Bank of Japan - Establishment of "Detailed Rules on Eligibility Criteria for Indices regarding Purchases of ETFs to Support Firms Proactively Investing in Physical and Human Capital"
1) The Bank shall establish the "Special Rules for Purchases of ETFs to Support Firms Proactively Investing in Physical and Human Capital". 2) The Bank shall seek, from the Minister of Finance and the Commissioner of the Financial Services Agency, authorization regarding the implementation of 1., in accordance with Article 43, Paragraph 1 and Article 61-2 of the Bank of Japan Act.

The Bank of Japan - Establishment of "Special Rules for Purchases of ETFs to Support Firms Proactively Investing in Physical and Human Capital"
At the Monetary Policy Meeting held on March 14 and 15, 2016, the Policy Board of the Bank of Japan made the following decisions in light of facilitating monetary operations


RBI - Issues in Banking Today
Speech by Dr. Raghuram Rajan, Governor of the Reserve Bank of India. Topics covered include: Dealing with Stressed Loans, Asset Quality Review, and Improving Bank Management and Governance.

RBI - Towards Rules of the Monetary Game
Speech by Dr. Raghuram Rajan, Governor of the Reserve Bank of India.

RBI - Towards Rules of the Monetary Game
Speech by Dr. Raghuram Rajan, Governor of the Reserve Bank of India.

RBI - Review of risk weights assigned to sovereign debt
In terms of the extant directions, deposit accepting NBFCs, systemically important non-deposit taking NBFCs, all NBFC-MFIs and all NBFC-IFCs shall maintain a minimum capital ratio consisting of Tier I and Tier II capital which shall not be less than 15 per cent of its aggregate risk weighted assets on-balance sheet and of risk adjusted value of off-balance sheet items.

SEBI Board Meeting summary
The SEBI Board met in New Delhi and took the following decisions:
Imposing restrictions on wilful defaulters, SEBI budget for the year 2016-17, Review of manner of dealing with Audit Reports containing Qualifications, and the Brightline Tests for Acquisition of 'Control' under SEBI Takeover Regulations.

BSE gets in-principle approval for listing
Paving the way for listing of BSE, markets regulator Sebi said it has given in-principle approval to the stock exchange to launch its initial public offering. BSE, in January, had sought approval from capital markets regulator The Securities and Exchange Board of India (Sebi) for launching the IPO, saying it is in compliance with all the requirements for listing. The exchange has been seeking to get listed for a long time, but necessary clearances have not been forthcoming on one issue or the other. (Economic Times)


Australian Government: Australian Treasury - Objective of superannuation
The Government released the discussion paper entitled 'The objective of superannuation'. This paper provides background and questions for consultation on the proposed objective of the superannuation system.

Australian Treasurer tells big regulators to prepare for new fintech rules
Australia's top financial regulators have been told by Treasurer Scott Morrison to prepare for a new system to regulate financial technology start-ups that will allow entrepreneurs to spend more time building business ideas and less time navigating complex financial services regulations. The federal government is expected to release next week policy changes to support the growth of fintech companies threatening to disrupt banking incumbents. This will include a "regulatory sandbox" scheme, which will allow fintech startups to test their products and systems in a controlled environment. Under the proposal, early stage start-ups would be able to avoid extensive regulatory licence applications, which can eat up seed capital before they determine whether an idea has prospects of success. (Australian Financial Review)


FSC - Introduction of Korea's Individual Savings Accounts (ISAs)
South Korea's Individual Savings Accounts (ISAs) were introduced on March 14, 2016, in which individuals can invest into various financial products such as savings, funds and derivative-linked securities.

FSC - Corporate Restructuring Progress in 2015 and Plan for 2016
A total of 299 companies - 54 large companies and 175 SMEs - received the ratings of C and D in credit risk evaluations last year to be subject to restructuring. They are now under a debt workout program or a rehabilitation procedure.


Government left toothless by financial crisis bill
The current framework laid out by the financial system crisis prevention and mitigation bill (PPKSK), which leaves little room for the President to take action during any future financial crises, has raised concerns among analysts over how effectively crises can be managed should anything unprecedented occur. The PPKSK bill - formerly known as the financial stability safety net (JPSK) bill - prevents any government intervention or financial assistance in the event of a financial crisis that may lead to the collapse of one or more systematically important domestic banks (DSIBs). (Jakarta post)

OJK drafts rule on bail-in scheme to salvage ailing banks
The Financial Services Authority (OJK) is preparing a regulation that will provide details of the necessary steps to be taken to salvage ailing banks and prevent the crisis from spreading further. The regulation will be a follow-up of the financial system crisis prevention and mitigation bill (PPKSK) currently being deliberated at the House of Representatives. An OJK commissioner Nelson Tampubolon said under the regulation the banks' shareholders will be required to provide extra capital to support a "bail-in scheme" in times of crisis. (Jakarta post)


BIS - Literature review on integration of regulatory capital and liquidity instruments
This working paper aims at reviewing the literature's assessment of recent reforms. It consists of "three essays" on capital, on liquidity and its interaction with capital and on other supervisory requirements. Although there are many studies on the effects of capital requirements, there are relatively few on the effects of liquidity requirements and other supervisory tools. In part, this is because capital requirements have been in place for a considerable time and over more than one business cycle, while liquidity requirements and other supervisory tools, such as buffers, macroprudential policies and stress tests, have only been implemented since the recent financial crisis.


CFTC Staff Provides Relief in Connection with Swap Trade Confirmations
The U.S. Commodity Futures Trading Commission's (CFTC) Division of Market Oversight (DMO) issued a no-action letter extending the time period for relief in connection with swap trade confirmation requirements that previously was provided in CFTC Staff Letter 15-25, which expires on March 31, 2016. The no-action letter extends relief to the earlier of (1) 11:59 pm (Eastern Time) March 31, 2017 or (2) the effective date of revised CFTC regulations that establish a permanent solution to the confirmation matters raised by the current regulations. The relief is subject to terms and conditions in the letter.

Office of the Comptroller of the Currency Proposes Rule Changes to Reduce Regulatory Burden
Some of the proposal include: remove notice and approval requirements for certain changes in permanent capital involving national banks; simplify certain licensing rules for business combinations involving federal mutual savings associations; clarify national bank director oath requirements; remove unnecessary burden with respect to federal savings associations' fidelity bond activities; and others. Comments must be subitted within 60 days of the Federal Register notice publication.


ESAs publish final draft technical standards on margin requirements for non-centrally cleared OTC derivatives
The European Supervisory Authorities (EBA, EIOPA, ESMA - ESAs) published the final draft Regulatory Technical Standards (RTS) outlining the framework of the European Market Infrastructure Regulation (EMIR).

EBA issues revised list of ITS validation rules
The European Banking Authority (EBA) issued a revised list of validation rules in its Implementing Technical Standards (ITS) on supervisory reporting, highlighting those which have been deactivated either for incorrectness or for triggering IT problems. Competent Authorities throughout the EU are informed that data submitted in accordance with these ITS should not be formally validated against the set of deactivated rules.

ESMA consults on securities financing transaction regulation
The European Securities and Markets Authority (ESMA) issued a Discussion Paper (DP) on rules under the Securities Financing Transaction Regulation (SFTR).

European Commission - Keynote speech by Commissioner Jonathan Hill at the Economist's Future of Banking Summit
The speech outlines the priorities to strengthen capital markets in Europe.

European Commission - Tax transparency: Commission welcomes agreement reached by Member States for the automatic exchange of information on country-by-country reports (CbCR) of multinational companies, subject to UK scrutiny
The new rules will apply to multinational companies which operate cross-border in the EU. Once implemented, all Member States will have the information they need to protect their tax bases and to effectively address companies that try to escape paying their fair share of taxes where they make their profits.

The UK Treasury & The FCA - Reforms will make financial advice and guidance work better for consumers
Millions of consumers could have better access to affordable financial advice and guidance that meets their needs at every stage of their lives as a result of recommendations from the Financial Advice Market Review (FAMR), published today.

The Bank of England - Bank capital: Debating again
Speech by Andrew Bailey

FCA publishes a Discussion Paper on the client money distribution rules and the Special Administration Regime
The Financial Conduct Authority (FCA) has published a Discussion Paper (DP), which seeks feedback on the FCA Client Assets sourcebook, specifically the client money distribution rules (CASS 7A), and how these rules work with the Special Administration Regime (SAR).

FCA publishes a Discussion Paper on the client money distribution rules and the Special Administration Regime
The Financial Conduct Authority (FCA) has today published a Discussion Paper (DP), which seeks feedback on the FCA Client Assets sourcebook, specifically the client money distribution rules (CASS 7A), and how these rules work with the Special Administration Regime (SAR).

FCA - Occasional Paper No. 13: Economics for Effective Regulation
This paper offers assistance to regulators and other policymakers in using modern economics in an effective and proportionate way to inform decisions. The paper proposes a structured framework for implementing a more markets-focused and holistic regulatory economic analysis, which draws on recent innovations in behavioural, competition and other research. This methodology - called Economics for Effective Regulation - is designed to support all stages of regulatory decision-making from problem diagnosis to impact assessment. In addition to describing the conceptual basis for the approach, the paper also provides a structured process and tools for undertaking this economic analysis in practice.

FCA - Feedback Statement on Call for Input: Regulatory barriers to innovation in digital and mobile solutions
In this Feedback Statement we summarise the feedback we received on our Call for Input: Regulatory barriers to innovation in digital and mobile solutions, set out our response and explain the next steps in the context of the wider Project Innovate agenda.


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