10 - 17 November 2015 | Issue 277
G20 Leaders publish communique following summit
G20 Leaders have issues a communique following the G20 Leaders Summit in Antalya on 15-16 November 2015. The communique highlights areas where critical work remains to enhance the stability of the financial system, including: further work on central counterparty (CCP) resilience, recovery planning and resolvability, on which the Financial Stability Board (FSB) has been asked to report back at the G20 Leaders' next meeting; measures to further strengthen oversight and regulation of the shadow banking sector; further progress in assessing and addressing, as appropriate, the decline in correspondent banking services; and implementation of OTC derivatives reforms.
ASIFMA Annual Conference 2015 to be held on 2-3 December 2015 in Hong Kong
As an industry-wide event, ASIFMA's flagship Annul Conference provides a unique opportunity for global and regional policy makers, high-level regulators and industry representatives from both sell-side and buy-side firms to meet and discuss important issues affecting the development of Asia's capital markets. Register now given seats are limited!
PBC Publishes China Monetary Policy Report Quarter Three, 2015
According to China Monetary Policy Report Quarter Three, 2015, published by the People's Bank of China (PBC) on November 6, the PBC will further advance interest rate liberalization reform, continuously foster benchmark interest rate and yield curve, and keep optimizing the interest rate formation mechanism. It is also required to optimize the central bank's policy rate system to enhance interest rate regulation and rationalize the mechanism for the transmission of policy rate of People's Bank of China to the financial market and even real economy. (NAFMII Newsletter)
Key bourses double margin requirements
The Shanghai and Shenzhen stock exchanges raised deposit requirements for margin trading to 100 percent from the current 50 percent on Friday, as part of China's efforts to curb market volatility. Margin trading refers to stock purchases made using borrowed money and was cited as one of the main culprits for the market rout earlier this year. Securities brokerages will be required to raise the margin deposit proportion from 50 percent to 100 percent starting Nov 23, according to statements released by both bourses. (Xinhua)
IMF chief supports inclusion of RMB into SDR basket
Christine Lagarde, managing director of the International Monetary Fund (IMF), said that the IMF staff has proposed the Executive Board to include the Chinese currency, the RMB, into its special drawing right (SDR) currency basket as a fifth currency and she supports it. (Xinhua)
HKMA - Regulatory regime for stored value facilities and retail payment systems commences operation
The regulatory regime for stored value facilities and retail payment systems under the Payment Systems and Stored Value Facilities Ordinance (the Ordinance) commenced operation. Under the Ordinance, the Hong Kong Monetary Authority (HKMA) is empowered to implement a mandatory licensing system for multi-purpose stored value facilities and perform relevant supervision and enforcement functions. A one-year period is allowed for existing issuers of stored value facilities or new market operators to apply for a licence from the HKMA.
HKMA - Senior Appointments at the Hong Kong Monetary Authority
The Hong Kong Monetary Authority (HKMA) announced that the Financial Secretary, on the advice of the Governance Sub-Committee of the Exchange Fund Advisory Committee, has approved the following appointments:
(a) Mr. Howard Lee as Senior Executive Director with effect from 26 February 2016;
(b) Mr. Raymond Li as Senior Executive Director with effect from 26 February 2016;
(c) Mr. Raymond Chan as Executive Director with effect from 26 February 2016; and
(d) Mr. Shu-pui Li as Executive Director with effect from 7 August 2016.
SFC moves to paperless individual licences
The Securities and Futures Commission (SFC) announced that it will no longer issue printed licences to individual licensees with effect, when the Securities and Futures (Amendment) Ordinance 2015 came into operation.
MAS - Welcome Remarks by Ms Jacqueline Loh
Remarks by Ms Jacqueline Loh, Deputy Managing Director, Monetary Authority of Singapore. The speech addresses the Strategic partnership between Singapore and Shanghai.
MAS - Opening Address by Ms Merlyn Ee: Market Outlook 2016: Access the World with ETFs
Speech by Ms Merlyn Ee, Executive Director, Capital Markets Intermediaries and Corporate Planning & Communications.
Bank of Japan - Launch of the Bank of Japan FAQs
The Bank of Japan launched a new English web page entitled Bank of Japan FAQs, as part of its commitment to enhancing communication with the public.
Bank of Japan - Economic Activity and Prices in Japan and Monetary Policy
Speech by Yutaka Harada, Member of the Policy Board.
JSDA - Report of the Council for Tokyo Global Financial Center Promotional Activities
To enhance the functions of Japan's financial and capital markets, a variety of discussions are being conducted and recommendations made to strengthen Tokyo's status as a global financial center going forward. With these movements in mind, the securities and asset management industries have collaborated in setting up the Council for Tokyo Global Financial Center Promotional Activities. Council members include the Japan Securities Dealers Association, Japan Exchange Group, Inc., The Investment Trusts Association, Japan and Japan Investment Advisers Association. This council will discuss such topics as the advantages and disadvantages of Japan and its role and challenges as a global financial center. Progress with future discussions will be disclosed on this web page in due course.
Dr. Raghuram Rajan appointed as Vice-Chairman on BIS Board
Dr. Raghuram Rajan, Governor of the Reserve Bank of India, was elected as the Vice-Chairman, the Board of Directors of the Bank for International Settlements (BIS), at its meeting in Basel held yesterday for a period of three years from November 10, 2015.
No in-person verification for small MF investments
The Know Your Customer (KYC) norms for small-ticket mutual fund investments are likely to be relaxed. According to sources, the Securities and Exchange Board of India (Sebi) is planning to do away with the in-person verification (IPV) requirement for those who invest less than Rs 2 lakh. This move is to enable first-time customers to transact online and buy mutual fund offerings through e-commerce platforms. Sebi is likely to go to its board with these changes when it meets on November 30. (Business Standard)
ASIC - Focus for 31 December 2015 financial reports
ASIC announced its focus for 31 December 2015 financial reports of listed entities and other entities of public interest. Directors and auditors should continue to focus on values of assets and accounting policy choices. We continue to see companies using unrealistic assumptions in testing the value of assets or applying inappropriate approaches in areas such as revenue recognition,' ASIC Commissioner John Price said.
Introduction of Market Maker System and Trade Stabilization Measure in Stock Market
Korea Exchange (KRX) will introduce the market maker system for low liquidity stocks and trade stabilization measure to prevent large losses caused by erroneous trades as the Financial Service Committee has authorized the revision of relative regulations of KOSPI and KOSDAQ markets on November 4, 2015.
Advancement of Trading and Listing System of the KRX Bond Market
The Korea Exchange (KRX) adopted the When Issued Trading (WIT) for government bonds and the negotiated trading systems to increase the liquidity of the bond market and also improve the bond market system by laying the ground for listing and listing management of new types of debt securities such as non-standard ABSs, covered bonds and contingent convertible bonds (CoCos).
SEC - Public hearing on proposed revision to net liquid capital rules
The SEC is seeking public comments on a draft amendment to the rules on calculation and reporting of net liquid capital to better reflect the asset values and the changing market environments. The proposed key changes include (1) adjustment of position risk calculation, (2) inclusion of diverse financial instruments such as equity, debts, investment units and trusts in the risk calculation, and (3) updating of the net liquid capital calculation methods to be more flexible and suitable to the current market trends.
Corporate regulator treads carefully on PSE takeover of fixed-income bourse
Antimonopoly issues remain a key stumbling block to the unification of the country's equities and fixed-income trading platforms, with the Securities and Exchange Commission (SEC) unable to commit to a timetable for the merger's approval. (Business World Online)
FSB publishes reports on transforming shadow banking into resilient market-based finance
The FSB published the following reports :
1) Progress report on Transforming Shadow Banking into Resilient Market-based Finance: This report sets out actions taken to implement the FSB's two-pronged strategy to address financial stability concerns associated with shadow banking over the past year, and next steps.
2) Global Shadow Banking Monitoring Report 2015: This report presents the results of the FSB's fifth annual monitoring exercise to assess global trends and risks of the shadow banking system, reflecting data as of end-2014. It covers 26 jurisdictions and the euro area, representing about 80% of global GDP and 90% of global financial system assets.
3) Regulatory framework for haircuts on non-centrally cleared securities financing transactions: This report finalises policy recommendations in the framework for haircuts on certain non-centrally cleared securities financing transactions published in October 2014 to apply numerical haircut floors to non-bank-to-non-bank transactions and update the implementation dates of these recommendations. The framework aims to address financial stability risks in securities financing transactions.
FSB welcomes extension of industry initiative to promote orderly cross-border resolution of G-SIBs
The Financial Stability Board (FSB) welcomes the announcement by ISDA, SIFMA, ICMA and ISLA of the execution by 21 global systemically important banks (G-SIBs) of a revised ISDA Resolution Stay Protocol (the "Protocol"). The Protocol builds on the version developed in 2014, which focused on amending ISDA Master Agreements for over-the-counter (OTC) bilateral derivatives to improve the effectiveness of cross-border resolution actions. The coverage of the Protocol has now been extended to securities finance transaction master agreements.
FSB publishes fourth progress report on compensation practices
FSB publishes report on implementation of compensation principles and standards as part of ongoing monitoring for the G20. The progress report concludes that almost all FSB jurisdictions have now fully implemented the Principles & Standards for banks. The oversight of compensation practices has now been fully embedded in bank supervisory frameworks in most jurisdictions.
IOSCO Publishes final report on Standards for the Custody of CIS Assets
The report seeks to clarify, modernize and further develop international guidance for the custody of CIS assets consistent with IOSCO's core Objectives and Principles of Securities Regulation, June 2010 (IOSCO Principles). It sets out eight standards divided into two sections aimed at identifying the core issues that should be kept under review by the regulatory framework to ensure investors' assets are effectively protected. The first section focuses on key aspects relating to the custody function. It reaffirms the importance for the regulatory framework to provide for suitable custodial arrangements to be in place, clear segregation requirements and appropriate independence. The second part of the report is dedicated to standards relating more specifically to the appointment and ongoing monitoring of custodians.
BIS - What do new forms of finance mean for EM central banks?
Financial intermediation in emerging market economies (EMEs) has been transformed over the past decade: a higher volume of bond financing has gone hand-in-hand with a growing internationalization of financial markets and significant changes to the balance sheets of banks. The 2015 Deputy Governor meeting examined three interrelated aspects of the new forms of financial intermediation in EMEs: (a) the role of banks; (b) the role of debt securities markets; and (c) implications of recent changes in financial intermediation for monetary policy.
BIS - Finalising post-crisis reforms: an update - A report to G20 Leaders
This report reviews the Basel Committee's work since the global financial crisis to strengthen the international regulatory framework for banks. The measures introduced by the Committee include: increasing the quality and level of capital; enhancing risk capture; constraining leverage and excessive concentration; adding a macroprudential dimension to the regulatory framework; addressing liquidity risk; and enhancing supervision and promoting consistent global implementation of the Basel framework.
BIS - Implementation of Basel standards - A report to G20 Leaders on implementation of the Basel III regulatory reforms
The report summarises the steps taken by Basel Committee member jurisdictions to adopt the Basel III standards, banks' progress in bolstering their capital and liquidity positions, the consistency of implementation in jurisdictions assessed since the Committee's last report and the Committee's implementation work plan. It is accompanied by a separate report from the Committee to G20 Leaders on finalising the post-crisis reforms.
CFTC - Remarks of Chairman Timothy Massad before the CME Group Global Financial Leadership Conference
The speech addresses Central Clearing's Key Role in the Regulatory Framework, Clearinghouse Regulation, and Some Thoughts on the Way Forward.
William C Dudley: The US economic outlook and monetary policy
Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York,
ESAs define risk weights for credit ratings in the EU
The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) has published two draft Implementing Technical Standards (ITS) on credit assessments by External Credit Assessment Institutions (ECAIs). By determining an objective approach for attributing risk weights to the assessments of ECAIs, as well as a prudential approach for those cases lacking factual evidence, these standards will ensure sound credit assessments contributing to financial stability in the EU.
EBA consults on draft Guidelines on the treatment of CVA risk under SREP
The European Banking Authority (EBA) launched a public consultation on Guidelines on the treatment of credit value adjustment (CVA) risk under the supervisory review and evaluation process (SREP), as well as a data collection exercise for the Quantitative Impact Study (QIS) to calibrate the threshold values. These Guidelines are based on a policy recommendation contained in the EBA's CVA report and aim to provide a common European approach to the assessment of CVA risk under SREP, including adequacy of capital to cover for this risk, and the determination of any potential additional own funds requirements. The public consultation runs until 12 February 2016 and the data collection exercise should be completed on 28 January 2016.
EBA updates on remuneration practices and the use of allowances across the EU
The European Banking Authority (EBA) published a follow up report on the actions taken following the publication of its Opinion on the use of allowances, in October 2014, where Competent Authorities were asked to use all necessary supervisory measures to ensure that by 31 December 2014 those institutions using the so called 'role-based allowances' adjust their remuneration policies in line with the criteria set out in the Opinion. The follow-up report concluded that Competent Authorities have taken measures in this respect and, where necessary, asked institutions to implement the necessary changes. However, such measures will, in most cases, only be effective for the remuneration awarded for the performance year 2015, while only in few cases were changes to institutions' remuneration policies and practices already made for the performance year 2014.
ESAs define risk weights for credit ratings in the EU
The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) published two draft Implementing Technical Standards (ITS) on credit assessments by External Credit Assessment Institutions (ECAIs). By determining an objective approach for attributing risk weights to the assessments of ECAIs, as well as a prudential approach for those cases lacking factual evidence, these standards will ensure sound credit assessments contributing to financial stability in the EU.
EBA consults on information exchanges between authorities regarding qualifying holdings
The European Banking Authority (EBA) launched a public consultation on its draft Implementing Technical Standards (ITS) on the procedures, forms and templates that competent authorities in the EU should use when consulting each other on qualifying holdings. The objective of these ITS is to streamline information exchanges and ensure effective communications between concerned authorities, both on a cross-border basis and across sectors. This public consultation runs until 10 February 2016.
ESMA updates EMIR standards on data reporting
The European Securities and Markets Authority (ESMA) has published an update of existing technical standards regarding data reporting requirements under the European Markets Infrastructure Regulation (EMIR). EMIR requires counterparties to report their derivative trades to trade repositories following a defined data format.
EU finalises proposal for investment protection and Court System for TTIP
The European Commission has finalised its new and reformed approach on investment protection and investment dispute resolution for the Transatlantic Trade and Investment Partnership (TTIP). This follows another round of extensive consultations with the Council and the European Parliament. The proposal for the Investment Court System has been formally transmitted to the United States and has been made public.