16 FebruAry 2016 | Issue 286
HKEx - New Scheme Promotes HKEX's Currency, Stock and Metals Futures on Mainland
Hong Kong Exchanges and Clearing Limited (HKEX) has launched its Mainland Market Data Distribution Partnership Programme with information vendors (IVs) to further enhance market data distribution and marketing for its RMB Currency Futures, or USD-CNH Futures, stock futures and London Metal Mini Futures contracts (selected futures contracts). HKEX's new programme promotes wider availability of real-time data for the selected futures contracts, which are all likely to appeal to Mainland investors.
Market-stabilizing policies right call, says Premier Li
Policies used to tide over last year's unusual volatility in the stock and exchange market were a right call, said Premier Li Keqiang in his first appearance after the Spring Festival holiday. Those market-stabilizing measures, consisting with international practice, defused some "bombs" over a period of time and warded off systematic financial risk, said Premier Li at an executive meeting of the State Council, according to Xinhua. However, authorities in charge should also draw lessons from the experience, address internal management issues and implement initiatives and take both timely and effective approach, added the Premier. (China Daily)
PBOC - Transcript of Governor Zhou Xiaochuan's interview
Exclusive Interview with Caixin Weekly
Shenzhen-Hong Kong stock connect set to be delayed for longer due to market volatility
The plan to connect the Hong Kong and Shenzhen stock exchanges looks set to be delayed until at least the second half of this year, with the launch of the new cross-border scheme not possible until volatile markets turned stable, the heads of the local bourse said. "We have prepared well to launch the Hong Kong and Shenzhen stock connect for investors to conduct cross-border trading between the two markets. This is definitely a scheme which will be launched," Hong Kong Exchanges and Clearing chief executive Charles Li Xiaojia said.
Hong Kong Regulators release conclusions on introducing mandatory clearing and expanding mandatory reporting for OTC derivatives market
The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) published conclusions to the proposals made in a joint consultation on introducing mandatory clearing and expanding mandatory reporting for the second stage of the over-the-counter (OTC) derivatives regulatory regime. The conclusions paper sets out the revised proposals after taking into account market comments and feedback and seeks to further consult on the initial list of financial services providers.
HKMA & SFC - Fund Management Activities Survey 2015 Conducted by the Securities and Futures Commission (SFC)
HKMA invites institutions to participate in the SFC's annual Fund Management Activities Survey (the "FMAS") for the year ended 31 December 2015. The purpose of the survey is to collect information about fund management activities in Hong Kong for regulatory and market facilitation purposes and to develop a better understanding of the state of the fund management industry in Hong Kong.
The Hong Kong Monetary Authority (HKMA) announced the appointment of Mr Bao Mingyou as a Senior Adviser with effect from 16 February 2016. Mr Bao is seconded from the People's Bank of China (PBoC) to the HKMA. He will take up the position vacated by Ms Huo Yingli and offer advice and assistance in the areas of financial cooperation between Hong Kong and the Mainland, further development of renminbi businesses in Hong Kong, and promotion of Hong Kong's financial services industry on the Mainland.
SFC - Circular Issued by the Securities and Futures Commission ("SFC") on Protecting Client Assets Against Internal Misconduct
HKMA draws attention to the SFC issued circular to licensed corporations ("LCs") licensed for dealing in securities on protecting client assets against internal misconduct ("The Circular"). In the course of its supervisory work, the SFC observed that some LCs have weak internal controls and lax management supervision that render those LCs susceptible to the threat of internal misconduct. The Circular highlights the importance of internal controls and management supervision in guarding against the threat of internal misconduct. A non-exhaustive list of potential red flags, pitfalls and vulnerabilities, and a list of some key measures to which intermediaries should have regard when designing and implementing their operating and internal control procedures, are set out in the appendices to The Circular.
SGX revises calculation methodology for minimum trading price requirement
Singapore Exchange (SGX) is changing the methodology used to determine whether a company share price meets the minimum trading price (MTP) requirement, following market feedback. The change comes after SGX's extension last month to 1 September 2016 the date of the review of the volume weighted average price (VWAP) of shares of companies which consolidate their shares before 1 March 2016.
The Bank of Japan - Operational Changes to the Securities Lending Facility
The Bank of Japan will implement the following operational changes to the Securities Lending Facility, in order to ease stress in the Japanese government securities (JGSs) market with a view to further facilitating the Bank's money market operations as well as contributing to smooth settlement of JGSs. The changes will be effective on or after February 16, 2016.
The Bank of Japan - Monetary Policy and Structural Reforms
Speech by Hiroshi Nakaso, Deputy Governor of the Bank of Japan.
JSDA's comments on the Basel Committee's consultative document "Capital treatment for 'simple, transparent and comparable' securitizations"
The following comments and responses were made by JSDA members who are active participants in the Japanese securitization market.
JFSA - Publication of finalized amendments to the related orders, cabinet office ordinances and the Comprehensive Guidelines for Supervision of Financial Instruments Business Operators following the 2015 revisions of the "Financial Instruments and Exchange Act (FIEA)" | (Japanese Only)
The FSA finalized amendments to the related orders, cabinet office ordinances and the Comprehensive Guidelines for Supervision of Financial Instruments Business Operators following the 2015 revisions of the FIEA. The amendments update the rules pertaining to Specially Permitted Business for Qualified Institutional Investors. The amendments will be enforced on March 1, 2016.
JFSA - Publication of draft amendments to the "Ordinance for Enforcement of the Banking Act" | (Japanese Only)
The FSA proposed draft amendments to the "Ordinance for Enforcement of the Banking Act" pertaining to the amendments of the "Trade Insurance and Investment Act" and the "Act on Special Accounts." The amendments will be enforced on April 1, 2016.
RBI - Basel III Framework on Liquidity Standards - Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards
RBI decided that henceforth, in addition to the above-mentioned assets, banks will be permitted to reckon government securities held by them up to another 3per cent of their NDTL under FALLCR within the mandatory SLR requirement as level 1 HQLA for the purpose of computing their LCR. Hence the total carve-out from SLR available to banks would be 10 per cent of their NDTL. For this purpose, banks should continue to value such reckoned government securities within the mandatory SLR requirement at an amount no greater than their current market value (irrespective of the category of holding the security, i.e., HTM, AFS or HFT).
RBI seeks Comments on Working Group Report on introducing Interest Rate Options
The Reserve Bank of India today released the Report of the Working Group on Introduction of Interest Rate Options in India. Comments on the recommendations of the Group may be emailed by February 26, 2016. Final guidelines will be issued by the end March, 2016 taking into account the feedback received.
RBI working paper - Challenges of Effective Monetary Policy in Emerging Economies
By Amartya Lahiri and Urjit R. Patel
RBI - Issues in Banking Today
Speech by Dr. Raghuram Rajan, Governor
RBI - Indian Banking Sector: Gazing Into The Crystal Ball
Speech by Shri. S. S. Mundra, Deputy Governor
RBI - Financial Stability - Issues and Concerns : Are We Barking up All Right Trees?
Speech by Shri R. Gandhi, Deputy Governor
SEBI - Review of Offer for Sale (OFS) of Shares through Stock Exchange Mechanism
Comprehensive guidelines on sale of shares through Offer for Sale mechanism were issued vide circular no CIR/MRD/DP/18/2012 dated July 18, 2012. These guidelines have been modified based on the representation/suggestion received from various stakeholders from time to time.
Australia Treasury - OECD BEPS transfer pricing recommendations
The consultation paper seeks stakeholder views on adopting the new OECD guidance in the context of the Australian tax system, particularly in addressing issues related to the timing of implementation of the recommendations, guidance that may be required from the ATO on the uptake of the recommendations, or any unintended consequences that might need to be addressed. Closing date for submissions: Friday, 26 February 2016.
Australia Treasury - Tax incentives for early stage investors
The tax incentives will provide concessional tax treatment for investors through a non-refundable tax offset and a capital gains tax (CGT) exemption on investments that meet certain eligibility criteria. A cornerstone of this consultation is the definition of an innovation company. The Government is keen to hear from stakeholders on the appropriate definition of an innovation company and how the eligibility principles and criteria can leverage off existing industry concepts and business practices.
FSC Chairman Convened an Emergency Meeting on Feb. 10
FSC Chairman Yim Jong-yong convened an emergency meeting of high-ranking FSC officials on February 10 to make sure policy measures are in place amid growing market concerns over the recent developments in financial markets at home and abroad.
FSC Convenes Meeting over Recent Developments in Global Financial Markets and Policy Response
The FSC convened a meeting with the FSS and relevant research institutions to review policy implications of recent developments in global financial markets and discuss our policy responses.
KRX - Key Business Plan for 2016
Announced on Jan. 21, in Korean
KRX Members Allowed to Deal Futures Directly with US customers
The Commodity Futures Trading Commission (CFTC) has issued an order to Korea Exchange (KRX) permitting certain KRX members to deal KRX derivatives products such as KOSPI 200 futures directly with US customers without registering as futures commission merchants (FCMs).
E-commerce road map to be issued this month
The government is finalizing a long-awaited e-commerce road map that will provide guidelines on digital business, from start-up funding and consumer protection to cyber security. Communication and Information Minister Rudiantara said that all related ministries and agencies had agreed to the draft and that it would be issued this month. (Jakarta Post)
Agreement to give Indonesian banks leeway in Malaysia
The Financial Services Authority (OJK) will sign an agreement soon with Malaysia's banking authority, Bank Negara Malaysia (BNM), easing restrictions for Indonesian banks operating there. The bilateral deal, expected to be signed in the first quarter of this year, will treat Indonesian banks as equals with Malaysia's local banks, amid complaints of difficulties operating fully in Malaysia. The equal treatment will include ATM installations and payment services fees, said OJK chairman Muliaman D. Hadad, without disclosing further details. (Jakarta Post)
CPMI & IOSCO - Clearing of deliverable FX instruments
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a statement on the clearing of deliverable FX instruments by CCPs. The statement clarifies the expectations of CPMI and IOSCO - as originally set out in the Principles for Financial Market Infrastructures - with respect to CCP clearing of deliverable FX instruments and the associated models for effecting their settlement.
BIS - General guide to account opening
The revised version of the General guide to account opening and customer identification takes into account the significant enhancements to the Financial Action Task Force (FATF) Recommendations and related guidance. In particular, it builds on the FATF Recommendations, as well as on two supplementary FATF publications specifically relevant for this guide: Guidance for a risk-based approach: The banking sector and Transparency and beneficial ownership, both issued in October 2014.
New Chairmanship for LEI ROC
On 1 February 2016, the Legal Entity Identifier Regulatory Oversight Committee (LEI ROC) elected as its new Chairman Joseph Tracy, Executive Vice-President, Chief of Staff's Office, Federal Reserve Bank of New York, and representative on the ROC of the Committee on the Global Financial System (CGFS). The ROC also elected as Vice-Chairs Daisuke Yamazaki, Director for trade Reporting, Office of International Affairs, Financial Services Agency, Japan, and Michael Ritter, Director, Head of Central Credit Register, Deutsche Bundesbank.'
GLEIF - New Data Quality Management Program, Introduced by GLEIF, Optimizes Integrity of Legal Entity Identifier Data Pool
The Global Legal Entity Identifier Foundation (GLEIF), the body responsible for ensuring the operational integrity of the Global Legal Entity Identifier (LEI) System, launched its data quality management program. Based on a set of clearly defined criteria, the program allows the quality of the LEI data pool (the publicly available information on legal entities identifiable with an LEI) to be monitored, assessed and further optimized. The first monthly report, published, reflects the very high level of data quality already achieved in the Global LEI System.
US Treasury - United States (U.S.) - European Union (E.U.) Financial Markets Regulatory Dialogue Joint Statement
U.S. and EU participants in the Financial Markets Regulatory Dialogue (FMRD) met on February 3, 2016 in Washington, D.C. to exchange views on financial regulatory developments as part of their ongoing dialogue.
Participants held productive discussions and exchanged views on bank capital and liquidity measures, approaches to cross-border bank supervision, bank structural reform, recent developments in bank resolution, central counterparty (CCP) resolution, over-the-counter (OTC) derivatives reforms, alternative investment fund managers, benchmarks, insurance, cooperation on audit oversight, and information sharing for supervisory and enforcement purposes. Looking forward, the participants committed to review the functioning of the dialogue with a view to improving U.S.-EU cooperation on financial regulation.
CFTC Staff Provides No-Action Relief from Registration to Certain Intermediaries Located Outside of the U.S.
This relief allows certain intermediaries to take advantage of the exemption from registration in CFTC Regulation 3.10(c)(3)(i), without meeting the condition that those intermediaries submit commodity interest transactions for clearing through registered Futures Commission Merchants in connection with swaps that are not required to be cleared.
CFTC Designates the National Futures Association as a Recipient of SDR Data
As a condition to the Order, access and use is limited to SDR data that will facilitate NFA's performance of functions delegated to it by the CFTC and other duties that NFA performs as an RFA. NFA is required to keep all non-public information received through access to SDR data confidential and to refer any request for such data to the CFTC for handling.
CFTC's Technology Advisory Committee Meeting Rescheduled for February 23, 2016
CFTC Chairman Timothy Massad is the current sponsor of this advisory committee. The TAC will discuss: 1) the CFTC's proposed Regulation Automated Trading (Reg AT); 2) swap data standardization and harmonization; and 3) blockchain and the potential application of distributed ledger technology to the derivatives market.
CFTC's Energy and Environmental Markets Advisory Committee to Meet on February 25, 2016
CFTC Commissioner J. Christopher Giancarlo is the Sponsor of this advisory committee. The meeting will focus on three subjects: First, the EEMAC will present a report summarizing its 2015 proceedings. Second, the EEMAC will examine the Commission's Proposed Order Exempting the Southwest Power Pool from Certain Provisions of the Commodity Exchange Act. Third, the Committee will consider the CFTC Staff Preliminary Report regarding the Swap Dealer De Minimis Exception.
CFTC Issues an Exemption to the Korea Exchange Permitting Designated Korea Exchange Members to Deal Directly with U.S. Customers
The Commodity Futures Trading Commission (CFTC) issued an Order to the Korea Exchange (KRX) permitting certain KRX Members to solicit and accept orders and in connection therewith, accept funds directly from U.S. customers for trading on KRX without having to register with the CFTC as futures commission merchants (FCMs). The order also permits these designated KRX Members to engage in marketing conduct in the U.S. for a period not to exceed thirty days. This exemption follows similar exemptions granted to other foreign exchanges or foreign regulators pursuant to Regulation 30.10.
ESMA consults on implementation of the benchmarks regulation
The European Securities and Markets Authority (ESMA) published a Discussion Paper (DP) regarding the technical implementation of the incoming Benchmarks Regulation (BR). ESMA is seeking stakeholder's input to inform its future proposals on draft Regulatory Technical Standards (RTS) and Technical Advice (TA) to the European Commission.
ESMA announces open hearing on MAR guidelines
The European Securities and Markets Authority (ESMA) will hold an open hearing on its Consultation Paper published on the 28th of January 2016 on two sets of draft Guidelines to be issued by ESMA under the remit of Regulation (EU) No 596/2014 of the European Parliament and of the Council on market abuse (MAR).
ESMA publishes first supervisory convergence work programme
The European Securities and Markets Authority (ESMA) published its first Supervisory Convergence Work Programme 2016 (SCWP), which details the activities and tasks it will carry out to promote sound, efficient and consistent supervision across the European Union.
ESMA resumes US CCP recognition process following EU-US agreement
The European Securities and Markets Authority (ESMA) welcomes the common approach announced by the European Commission and the US Commodity Futures Trading Commission (CFTC) on the equivalence of CCP regimes.
ESMA publishes responses to the consultation on PRIIPS key information documents
The European Securities and Markets Authority (ESMA) published the responses received to the Consultation Paper on PRIIPs Key Information Documents.
ESMA publishes responses to the consultation on access, aggregation and comparison of TR data
The European Securities and Markets Authority (ESMA) published the responses received to the Consultation Paper on access, aggregation and comparison of TR data.
ESMA calls for market data experts to join stakeholder panel
The European Securities and Markets Authority (ESMA) has issued a call for candidates regarding its consultative working group (CWG), a panel made up of 20 market data experts, working on market data issues.
ESMA, national securities regulators and ECB to exchange information
The European Securities and Markets Authority (ESMA) and the European Central Bank (ECB) concluded a Memorandum of Understanding (MoU) that will allow the exchange of information and cooperation to help both authorities in fulfilling their respective mandates.
ESMA publishes translations of its guidelines on complex debt instruments and structured deposits
The purpose of these Guidelines is to ensure a common, uniform and consistent application of these definitions.
ESMA to focus on governance, strategy, data and fees in 2016 supervision
The European Securities and Markets Authority (ESMA) published its 2016 supervisory priorities for credit rating agencies (CRAs) and trade repositories (TRs), as well as its annual report summarising the key supervisory work and actions undertaken during 2015.
EBA publishes Guidelines on cooperation agreements between deposit guarantee schemes
The European Banking Authority (EBA) published its final Guidelines on cooperation agreements between deposit guarantee schemes (DGSs). These Guidelines include a multilateral cooperation framework agreement and minimum prescriptions to promote the rapid and consistent conclusion of cooperation agreements between DGSs, as provided under the new Deposit Guarantee Schemes Directive (DGSD).
EBA publishes final draft ITS on the mapping of ECAIs credit assessments for securitisation positions
The European Banking Authority (EBA) published final draft Implementing Technical Standards (ITS) on the mapping of External Credit Assessment Institutions' (ECAIs) credit assessments for securitisation positions. These ITS will be part of the Single Rulebook in banking aimed at enhancing regulatory harmonisation across the European Union (EU) and will allow the credit ratings on securitisations assigned by registered credit rating agencies to be used for the purposes of calculating institutions' capital requirements.
EBA expresses dissent over EU Commission proposed amendments to the MREL technical standards
The European Banking Authority (EBA) issued an Opinion to the European Commission expressing its dissent over some of its proposed amendments to the EBA final draft Regulatory Technical Standard (RTS) on the criteria for setting the minimum requirement for own funds and eligible liabilities (MREL) and encouraging the prompt adoption of the standard.
EBA sets out roadmap for the implementation of the regulatory review of internal models
The European Banking Authority (EBA) published an Opinion specifying the general principles and timelines for the implementation of the regulatory review of the internal ratings-based (IRB) approach. The aim of the Opinion is to provide guidance and clarity to both Competent Authorities and institutions on the planned review and its implementation. The Opinion is supported by a Report, which summarises the feedback received from the public consultation on the EBA discussion paper on the future of the IRB approach.
European Commission extends by one year the application date for the MiFID II package
The Commission has proposed a one year extension to the entry into application of the revised Markets in Financial Instruments Directive, or MiFID II.
European Commission - Speech by Commissioner Jonathan Hill on 2016 priorities for an approach to resolution for CCPs
"We need to consider how to approach other systemic financial institutions like central counterparty clearing houses, or CCPs. We have required more clearing to go through central counter parties. That's good for transparency and will reduce risk. But now, if we are going to rely more on CCPs, we also need to put in place a system so that we can resolve them if anything goes wrong. As CCPs operate across borders, it's important that we engage internationally on this issue. So, I have decided that the sensible way to proceed is to align our work on this with the work being taken forward as part of the G20 agenda. We'll table a proposal for an effective recovery and resolution regime for clearing houses towards the end of the year."
UK Regulators - Complaints against the Regulators
We, along with the Bank of England and the Prudential Regulation Authority (the regulators) are consulting on changes to how complaints about us are reported and responded to.
FCA - Strengthening accountability in banking and insurance: implementation of SM&CR and SIMR, and PRA requirements on regulatory references
This policy statement contains, among other things, the PRA and FCA final rules to implement the proposals for applying the Senior Insurance Managers Regime (SIMR) to Swiss general insurers.