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ASIFMA Asia Regulatory Review
 


12 - 19 January 2016 | Issue 283

Spotlight

Job opening at ASIFMA - Manager, Office of the CEO

ASIFMA now seeks a Manager to provide coordination, research and analytical support for the office of the CEO. This person will play a central role in coordinating daily work and projects across ASIFMA and will support the CEO directly in his external role, including providing high quality briefing and speaking notes. This person will also contribute to our corporate governance by supporting our senior management and board processes. Application deadline: 22 January 2016.


Updates

CHINA

PBOC Normalizes Deposit Reserve Requirement on Offshore Financial Institutions' Onshore Deposits
PBOC has decided that, starting from January 25th, 2016, PBOC will normalize deposit reserve requirement on offshore financial institutions' onshore deposits. The above mentioned offshore financial institutions do not include foreign central banks and similar institutions such as other official reserve management institutions, international financial institutions, and sovereign wealth funds. Normalizing deposit reserve requirement on offshore financial institutions' onshore deposits is a further improvement of China's current deposit reserve system. This measure will not affect onshore RMB liquidity. PBOC will utilize a combination of policy measures to keep the liquidity of the banking system at an appropriately adequate level.

PBOC - Second Group of Foreign Central Banks and Similar Institutions Entering the Chinese Inter-bank Foreign Exchange (FX) Market

The second group of foreign central banks and similar institutions completed registration with the China Foreign Exchange Trading System (CFETS), and officially gained access to the Chinese inter-bank foreign exchange (FX) market. This will contribute to greater openness of the Chinese foreign exchange market. The second group of foreign central banks and similar institutions included the Reserve Bank of India, the Bank of Korea, the Monetary Authority of Singapore, the Bank Indonesia, the Bank of Thailand, the Bank for International Settlement, and the International Finance Corporation.

PBOC Promote Credit-asset Pledged Relending | (Chinese Only)
As of October 2015, the People's Bank of China (PBOC) started to promote the credit-asset pledged relending pilot program in 11 provinces and municipalities, including Shanghai and Jiangsu. In 2015, the PBOC completed the internal rating on 3,022 qualified loan enterprises among local corporate financial institutions and proceed smoothly, encompassed the qualified credit assets into the scope of acceptable, eligible collaterals for the central bank to make relending. This helps address relatively shortage of high-grade bond collaterals of local corporate financial institutions, and facilitates the central bank to provide liquidity support for local corporate financial institutions. (NAFMII Newsletter)

CSRC - China to further open up capital market
China's capital market will open wider to foreign investors in 2016 and domestic brokerages will expand business overseas, the country's securities watchdog said. China will gradually increase the quota for Qualified Foreign Institutional Investors (QFII) and RMB QFII, said Xiao Gang, head of China Securities Regulatory Commission, at a national conference on securities market regulation. QFII and RQFII are designed for foreign investors to trade securities in China's largely isolated capital market. (China Daily)

CBRC Solicits Public Opinions for the Guidelines on Internal Audit of Commercial Banks (Exposure Draft) | (Chinese Only)
In order to further improve the independence and effectiveness of internal audit, China Banking Regulatory Commission (CBRC) solicited public opinions for the Guidelines on Internal Audit of Commercial Banks (Exposure Draft) on January 14, and it will revise and optimize the Guidelines according to the opinions. Main amendments to the Guidelines include reinforcing the independence of internal audit, improving the organizational structure of internal audit, raising requirements for banks to formulate regulations on internal audit, specifying the work flow of internal audit, regulating audit outsourcing, defining the supervision and assessment mechanism, and differentiating bank groups from township and village banks, etc. (NAFMII Newsletter)


HONG KONG

Asian Financial Forum explores Asia's role in global growth
The 9th Asian Financial Forum (AFF) opened on January 18, providing a high-level platform for more than 2,600 influential members of the global financial community to tap the investment opportunities of the evolving Asian and global economies. The theme of this year's forum is "Asia: Shaping the New Paradigm for Growth".

HKMA - Revised Framework for Market Risk Capital Requirements

The HKMA's current intention would be to implement the revised market risk capital framework in accordance with the BCBS timetable and so the HKMA will consult the industry on its implementation proposals for Hong Kong in due course, taking account of the progress of the BCBS in finalising related standards that may have an impact on the framework. As the revised market risk capital framework in effect represents a significant overhaul of the current market risk capital framework, it is likely to have impacts on, among other things, the capital requirements, systems, data and resources of locally incorporated authorized institutions (AIs), particularly for those with material market risk exposures.


HKMA - Monetary Authority Announces Countercyclical Capital Buffer for Hong Kong
The Monetary Authority announced today, 14 January 2016, that the countercyclical capital buffer (CCyB) for Hong Kong will increase to 1.25% with effect from 1 January 2017, from the current 0.625%. This increase is consistent with the Basel III phase-in arrangements for the CCyB.

HKMA head Norman Chan vows to defend Hong Kong peg with HK$3.3tn war chest
The head of the Hong Kong Monetary Authority has vowed to defend the 32-year-old Hong Kong dollar peg even though it is facing up to US$130 billion of capital outflows due to last month's US interest rate rise and the weak local economy. "We have no plan, no intention, and have no need to change the peg link system which has served Hong Kong financial markets well over the past three decades," HKMA chief executive Norman Chan Tak-lam said on the sidelines of the Asian Financial Forum meeting in Hong Kong. (SCMP)

HK FSTB - Public Consultation on Open-ended Fund Companies
Consultation Conclusions (issued on 15 January 2016)

SFC - Circular to applicants of SFC-authorized mandatory provident fund products related to Default Investment Strategy ("DIS")
The purpose of this circular is to provide guidance to applicants seeking the SFC's authorization of new constituent funds ("CFs") of mandatory provident fund schemes ("MPF Schemes") and pooled investment funds ("PIFs") related to DIS ("DIS-related applications") that are subject to the 6-month application lapse policy and the concurrent review by the MPFA and SFC with reference to the Oct 2015 Circular. Capitalised terms shall have the same meaning as defined in the Oct 2015 Circular unless otherwise provided.

HKEx - Liquidity Provision Interruptions and Pricing Issues
The Listing Rules require structured products issuers (Issuers) to appoint liquidity providers (LPs) to provide liquidity in each structured product issue. Issuers and LPs should ensure adequacy and reliability of liquidity provision systems to provide uninterrupted liquidity for trading of structured products in the market at prices that largely reflect the value of the products. Interruptions to liquidity provision and mispricing are not conducive to the healthy development of the listed structured products market.

HKEx - Risk Management and Opportunities under RMB Volatility
Charles Li Direct blog.

More connect schemes, commodity and yuan products in HKEx's new three-year plan
Hong Kong Exchanges and Clearing will unveil more cross-border schemes and more big plans for pushing ahead with commodities and yuan business in the next three years on Thursday as the local bourse fights to retain its role as a gateway between China and the international market, two sources said. HKEx's board has approved the three-year strategic plan which chief executive Charles Li Xiaojia will unveil Thursday. The sources said the blueprint would include various types of cross-border trading connect schemes, an aggressive expansion of commodities products as well as a big push into more yuan products. (SCMP)


SINGAPORE

MAS - Consultation Paper on Proposed Amendments to the Securities and Futures Reporting of Derivatives Contracts Regulations
MAS is proposing to amend the Securities and Futures (Reporting of Derivatives Contracts) Regulations 2013 to require the reporting of commodity and equity derivatives contracts, which would complete the implementation of the OTC derivatives trade reporting regime in Singapore. MAS is also proposing revisions to finetune the reporting obligations for certain non-bank financial institutions ("FIs"). Comment deadline: 15 February 2016.

MAS - "Growth Drivers in Asia and Singapore"
Opening Remarks by Mr Heng Swee Keat, Minister for Finance


JAPAN

The Bank of Japan - Confirmation of the Start Date of the Extension of the Operating Hours of the BOJ-NET
In view of enhancing the safety and efficiency of payment and settlement activities through promoting effective use of the BOJ-NET, the Bank of Japan has today confirmed that the extension of the operating hours (until 21:00) of the BOJ-NET will start on Monday, February 15, 2016, as scheduled.

The Bank of Japan - Results of the 64th Opinion Survey on the General Public's Views and Behaviour (December 2015 Survey)
This is an English translation of the Japanese original released on January 8, 2016.


INDIA

India, a large economy with promising economic outlook: Arun Jaitley
Finance Minister Arun Jaitley on Wednesday said that India has emerged among the few large economies in the world with a promising economic outlook. "Economic growth is moving in the right direction and its pace is expected to gather momentum in the coming quarters, once the impact of the on-going economic and structural reforms takes the firm root," he said in his opening remarks at 14th Financial Stability and Development Council (FSDC) meeting with the financial sector regulators. (Economic Times)

SEBI - Revised Position Limits for Currency Derivatives Contracts
With a view to maintain orderly conditions in the domestic foreign exchange market and based on the recommendation from RBI, it has been decided to enhance the gross open position limits for bank stock brokers as authorized by RBI. Accordingly, it has been decided to revise the position limit per stock exchange for bank stock brokers with respect to the currency pair USD-INR.

SEBI - Steps for Curbing Volatility in Commodities Derivatives Markets
With a view to curb the speculative participation and consequent volatility in prices of agricultural commodities, SEBI has reviewed the existing norms related to commodity derivatives markets and has decided to make following regulatory changes in the case of trading of agricultural commodities: 1) Reducing the position limits for near month contracts for both member and client level from present 50% to 25% of the overall position limits for all contracts expiring in the month of March, 2016 and onwards. 2) Reducing the Daily Price Limits (DPL) from 6% to 4%.

SOUTH KOREA

FSS - New Rules Adopted for Securities-Based Crowdfunding
The Financial Services Commission announced that amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act that provide new rules for companies offering and selling securities through crowdfunding were adopted on January 5, 2016.

FSS - Amendments Proposed for D-SIBs and Countercyclical Capital Buffer as Recommended by the Basel Committee on Banking Supervision
The Financial Services Commission announced on December 17, 2015, amendments to the Regulation on Supervision of Banking Business and the Supervisory Regulation on Financial Holding Companies. The proposed amendments are intended to facilitate the designation of domestic-systemically important banks (D-SIBs) and the imposition of countercyclical capital buffer as recommended by the Basel Committee.

FSC chief calls for Korea's MSCI index inclusion
South Korea's top financial regulator called on the chief of global index provider MSCI Inc. on Friday to include the nation in its advanced market index, officials said. Financial Services Commission Chairman Yim Jong-yong made the appeal to include the country's benchmark index in the MSCI's developed market index during a meeting with visiting MSCI Chairman Henry Fernandez, according to the FSC officials. (Korea Herald)


Banks plan to enhance online services
Korea will introduce an enhanced online banking service later this year that will enable consumers to look up their accounts in 16 domestic banks, transfer money between them and close accounts, the Financial Services Commission (FSC) said. In the so-called Account Info service, the first of its kind in the global banking industry, customers won't need to make a visit banks with which they trade to find what bank balance they have, send money from one bank to the other and will be able to close their accounts with one click, the financial regulator said. (Korea Times)


INDONESIA

Government insists on opening financial services for AEC
The government has called on the House of Representatives to ratify the sixth package of protocols for the ASEAN Framework Agreement on Services (AFAS), which obliges ASEAN members to liberalize several sectors for each other, including financial services. The protocols are among the ASEAN programs that are gradually opening services among its members in relation to the ASEAN Economic Community (AEC). The House's approval is expected before April, said Finance Minister Bambang Brodjonegoro. (Jakarta Post)

RI needs liquidity, government tells Bank Indonesia
The government expressed concerns over liquidity during its first-ever attendance at Bank Indonesia's monthly meeting. Coordinating Economic Minister Darmin Nasution said he had given input to the central bank on behalf of the government regarding the current economic situation. "We talked about a lot of things. On my part, of course I talked about what the government was doing to do to boost growth," he said after attending the meeting for two-and-a-half hours. "We talked about the [state] budget, investment and how they would affect liquidity. Major investment and early disbursement of state funds will surely require more liquidity." (Jakarta Post)

Bank Indonesia new capital buffer ruling 'positive for banks'
The central bank's new regulation that requires banks to set aside an additional capital buffer on top of existing capital requirements is regarded as positive for the local banking sector as it could mitigate losses from rapid loan growth, an international rating agency has said. Bank Indonesia (BI) issued the regulation on Dec. 28, requiring banks to prepare a "countercyclical buffer" of between zero to 2.5 percent of their risk-weighted assets. The exact rate will be determined at least once every six months. (Jakarta Post)

OJK says financial conglomerates have adequate capital
Financial conglomerates have adequate capital as they prepare for an upcoming regulation to soon be introduced by the Financial Services Authority (OJK), a top official says. The OJK's deputy commissioner for banking supervision, Irwan Lubis, said the agency had found that the 50 financial conglomerates under its supervision had sufficient capital ratios in accordance with the proposed policy. However, he said, the OJK would require an entity in a conglomerate to add more capital if it found the ratio inadequate according to the upcoming regulation. (Jakarta Post)

CYBERSECURITY & DATA

First-ever EU-wide cyber-security rules backed by Internal Market Committee
Firms supplying essential services, e.g. for energy, transport, banking and health, or digital ones, such as search engines and cloud computing, will have to take action to improve their ability to withstand cyber-attacks under new rules approved by Internal Market MEPs on Thursday. These rules, informally agreed by MEPs and Council negotiators on 7 December, were approved by 34 votes to 2. They now need to be endorsed by the Council and the full Parliament.

BIS - Benoit Coeure: Cyber resilience for financial market infrastructures
Speech by Mr Benoit Coeure, Member of the Executive Board of the European Central Bank, at the workshop on the CPMI-IOSCO Guidance on Cyber Resilience for Financial Market Infrastructures.

INTERNATIONAL

BIS - Minimum capital requirements for market risk
The purpose of the revised market risk framework is to ensure that the standardised and internal model approaches to market risk deliver credible capital outcomes and promote consistent implementation of the standards across jurisdictions. The key features of the revised framework include: A revised boundary between the trading book and banking book; a revised internal models approach for market risk; a revised standardised approach for market risk; a shift from value-at-risk to an expected shortfall measure of risk under stress; and incorporation of the risk of market illiquidity

UNITED STATES

CFTC's Division of Market Oversight Extends Conditional, Time-Limited No-Action Relief Regarding Masking Certain Reportable Identifying Information
The U.S. Commodity Futures Trading Commission's (CFTC) Division of Market Oversight (DMO) issued a letter providing a conditional, time-limited extension of the relief provided in CFTC Letter 13-41 regarding masking of certain identifying information required to be reported.

CFTC Issues Order Delegating to the National Futures Association Certain Functions Related to Notices of Swap Valuation Disputes Filed by Swap Dealers and Major Swap Participants
Beginning March 1, 2016, NFA will receive, review and maintain those notices on behalf of the CFTC, and provide summaries and reports regarding those notices to the CFTC.

EUROPE

EBA publishes revised final draft technical standards and Guidelines on methodology and disclosure for global systemically important institutions
The European Banking Authority (EBA) published today revised final draft technical standards and Guidelines on the further specification of the indicators of global systemic importance and their disclosure. The need for this revision was prompted by the new data template and some minor changes introduced by the Basel Committee on Banking Supervision (BCBS) in January 2015 for the identification of global systemically important banks (G-SIBs). The full data template with the detailed specification of the indicator values will now only be incorporated in the EBA Guidelines and will be updated on an annual basis.

EBA to hold a public hearing on draft technical standards under the Interchange Fee Regulation
On 19 February 2016 from 14:00 to 16:00, the European Banking Authority (EBA) will hold a public hearing on the consultation launched on its draft technical standards on the separation of payment card schemes and processing entities under the Interchange Fee Regulation (IFR).

ESMA Chair discusses impact of interest rates on securities markets
The European Securities and Markets Authority's (ESMA) Chair, Steven Maijoor delivered a speech to the Asian Financial Forum (AFF) on financial markets and the new normal monetary policy.

The Bank of England proposes tougher rules on bonus buy-outs
The Bank of England is proposing to strengthen the remuneration requirements on buy-outs of variable remuneration. These proposals represent an important addition to the current remuneration rules which seek to ensure greater alignment between risk and reward, discourage excessive risk-taking and short-termism and encourage more effective risk management.

The Bank of England - Debt, Demographics and the Distribution of Income: New challenges for monetary policy
Speech by Gertjan Vlieghe, External MPC member, Bank of England.

The Bank of England - Occasional consultation paper
In this consultation paper (CP), the Prudential Regulation Authority (PRA) sets out its proposals to delete rules and guidance from the PRA Handbook which have been replaced, or are in the process of being replaced by rules in the PRA Rulebook or supervisory statements (SS). The proposals do not represent a change in PRA policy. The proposals are relevant to all PRA firms, who are invited to comment.

 
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Data

Moody's

 

China Scraps the Stock Market Circuit Breaker

 

Moody's: Asian LSI rose to 31.1% in December

 

Persistent Volatility in Financial Markets




Fitch

 

Emerging Markets Risks Abound in 2016; Private Debt Key Challenge

 

China Currency, Equity Woes Highlight Stability Dilemma

 

Noble Able to Manage Increased Collateral Requirements

 

House Price Growth to Slow Significantly in Australia, NZ

 

Fitch Revises China Aoyuan's Outlook to Positive; Affirms 'B+





Standard & Poor's

 

A Closer Look At China's State-Owned Enterprises

 

A Depreciating Renminbi Will Further Strain Chinese Developers

 

Global Corporate Credit: Debt Has Outpaced Income Growth Since 2009.

 

Global Corporate Rating Trends 2016: Largest Negative Swing Since 2009

 

More Turbulence Looms Over Singapore Bond Market





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