17 - 25 November 2015 | Issue 278
The Asia Regulatory Review will take a short break and will return on 9 December 2015.
ASIFMA Annual Conference 2015 to be held on 2-3 December 2015 in Hong Kong
As an industry-wide event, ASIFMA's flagship Annual 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, seats are limited!
CPMI-IOSCO - Guidance on cyber resilience for financial market infrastructures
The Committee on Payments and Market Infrastructures (CPMI) and the Board of the International Organization of Securities Commissions (IOSCO) released the consultative paper Guidance on cyber resilience for financial market infrastructures ("the Cyber Guidance"). Key concepts built into the Cyber Guidance include the following:
- Board and senior management attention is critical to a successful cyber resilience strategy;
- The ability to resume operations quickly and safely after a successful cyber attack is paramount;
- FMIs should make use of good-quality threat intelligence and rigorous testing;
- Cyber resilience requires a process of continuous improvements;
- Cyber resilience cannot be achieved by an FMI alone; and
- It is a collective endeavour of the whole "ecosystem".
Central bank chief stresses financial security
China must build a more effective financial security system to cope with possible overseas attacks or sanctions, according to the governor of the country's central bank. Financial security is essential to national security, and the success of financial reform hinges on stability in the sector, the governor of the People's Bank of China (PBOC) Zhou Xiaochuan said in an article published in the People's Daily. He called for a mechanism to be put in place to monitor and counter risks, and for better regulations against money laundering and terrorism financing. (China Daily)
CSRC president: IPO registration system to be launched by next March
Chairman of the China Securities Regulatory Commission, Xiao Gang, said that China could roll out an IPO registration system as soon as next March. By the time the reform launches, the IPO process for companies will be shortened to about three to six months. Analysts say the registration system is a positive market reform that will reduce the prevalence of shell companies in the A-share and normalize valuations. (CNTV)
China Europe International Exchange launched in Frankfurt
A Sino-German joint venture named China Europe International Exchange (CEINEX) was launched here on Wednesday, kicking off the trading of Renminbi-denominated exchange traded funds (ETFs). CEINEX offers ETFs based on Chinese mainland's underlying assets and a broad range of RMB-denominated bonds. Two new RMB-denominated ETFs became available, namely the SSE 50 ETF and the Money Market ETF, issued by Commerzbank in partnership with Bank of China International and China Construction Bank International. (Xinhua)
London calling: 'Good progress' on UK-China stock exchange link
The feasibility study for a link between the Shanghai and London stock exchanges is under way and the two sides "are making good progress", London Stock Exchange chief executive Nikhil Rathi said in Beijing. But Rathi, also director of international development for the London Stock Exchange Group, declined to say when London investors could access bonds and stocks in Shanghai and Chinese investors could trade securities listed in London, because the study was still in the early stages. (SCMP)
HKMA - Supervisory Policy Manual (SPM): CR-G-9 Exposures to Connected Parties
The HKMA informed the following consultation with two industry Associations is issuing by notice in the Gazette today the SPM module "Exposures to Connected Parties" as a statutory guideline under section 7(3) of the Banking Ordinance. The SPM module is a revised version of the SPM module "Connected Lending". The revisions mainly include an expansion of the definition of connected parties for AIs' internal risk management purposes and further elaboration on the risk governance arrangements in respect of exposures to connected parties.
HKMA - MoF issues Renminbi Sovereign Bonds through Central Moneymarkets Unit of Hong Kong Monetary Authority
The Ministry of Finance will issue Renminbi Sovereign Bonds through the Central Money markets Unit of the Hong Kong Monetary Authority (HKMA). Please find attached the tender notice and the tender information memorandum of the Renmibi Sovereign Bonds to be issued by the Ministry of Finance. Please also find attached the tender-related information provided by the Issuing and Lodging Agent through the HKMA.
HKMA - Launch of Electronic Cheque (e-Cheque) publicity campaign
The Hong Kong Monetary Authority (HKMA) announced the launch of the e-Cheque publicity campaign. Jointly organized by the HKMA and the Hong Kong Association of Banks (HKAB), the publicity campaign aims to enhance the public understanding of the e-Cheque service before it is rolled out by the participating banks in phases from 7 December 2015 onwards.
HKMA - Norman T.L. Chan: A Fascinating Train Journey
Speech by by Norman T.L. Chan, Chief Executive, Hong Kong Monetary Authority
SFC proposes changes to the ATS Guidelines
The proposals reflect regulatory and market developments and mainly cover the implementation of the regulation of over-the-counter (OTC) derivative transactions, setting out more specific requirements for central counterparties that wish to provide clearing services for OTC derivative transactions. They also align the guidelines with international standards and practices and codify existing practices.
HKEx Announces Group Structure Changes in Preparation of New Strategic Plan
Hong Kong Exchanges and Clearing Limited (HKEx) announced changes to its Group structure as it prepares to launch and implement its strategic plan for 2016 to 2018, which will be announced in early next year. The changes will take effect on 1 January 2016, subject to regulatory approvals. "We have ambitious plans for the next three years that will require us to have the right people working together under a structure designed to best suit the Group's development plans at this time," said HKEx Chief Executive Charles Li. "We believe the changes we are announcing today position our businesses in Hong Kong and London (the HKEx Group) optimally to take advantage of the many opportunities we see over the next few years."
Singapore's RQFII quota increased | (Chinese Only)
With the approval of the State Council, Singapore's RQFII quota was increased to RMB100 billion. This is an important sign that China and Singapore are deepening their financial cooperation, which will not only boost Singaporean investors' demand for asset allocation and further open up the domestic capital market, but will facilitate bilateral trade and investment. (NAFMII Newsletter)
Singapore bourse reviewing corporate governance compliance
The Singapore Exchange (SGX) is reviewing compliance along its listed companies with corporate governance rules, a senior official said, as the bourse seeks to boost its credentials as a front-line regulator. Unexplained deviation from the code could lead to action against listed companies, Tan Boon Gin, SGX's chief regulatory officer, warned on Tuesday in a speech at the Thomson Reuters ASEAN. (Reuters)
Bank of Japan - Japan's Economic and Price Developments and Monetary Policy: Underlying Inflation Trend and Inflation Expectations
Speech by Sayuri Shirai, Member of the Policy Board.
RBA - Guy Debelle: Benchmarks
Speech by Guy Debelle, Assistant Governor (Financial Markets).
Accounting rules on foreign banks to be relaxed
Beginning next year, foreign banks operating in Seoul will not have to get approval from the nation's financial regulator for their financial statements. "Important strides have been made in relaxing financial regulations for foreign financial companies," Financial Supervisory Service (FSS) Governor Zhin Woong-seob said in a meeting with heads of foreign financial companies operating in the country. Foreign banks now have to submit their financial statements to the bank watchdog within two months before the settlement date. (The Korea Times)
OJK preps single licensing for banks, markets
The Financial Services Authority (OJK) is currently building a system that will integrate the licensing process for companies wishing to operate either in banking, capital markets or the financial sector. In so doing, the OJK hopes to increase efficiency in financial markets. OJK director of banking licenses Ahmad Berlian said the new system, expected to be ready by the end of this year, would receive license-related documents from and to those three sectors through a "single window". The OJK is currently discussing with industry players how to most effectively implement the new system. (Jakarta Post)
Indonesia to Make Green Financing Compulsory for Banks by 2018
Indonesia's financial regulator will introduce rules to restrict banks' lending to environmentally-damaging projects by 2018, which may eventually help the nation curb the forest fires that choke parts of Southeast Asia with thick haze for months each year. (Bloomberg)
FSB publishes Standards and Processes for Global Securities Financing Data Collection and Aggregation
The Financial Stability Board (FSB) published its report Standards and Processes for Global Securities Financing Data Collection and Aggregation. Securities financing transactions such as securities lending and repurchase agreements (repos) play a crucial role in supporting price discovery and secondary market liquidity for a wide variety of securities. However, such transactions can also be used to take on leverage as well as maturity and liquidity mismatched exposures.
BCBS Working Papers: Making supervisory stress tests more macroprudential: Considering liquidity and solvency interactions and systemic risk
The paper offers several approaches to incorporating liquidity effects and their interactions with solvency that differ in their level of comprehensiveness and sophistication. In particular, the paper offers contributions to three key areas.
BIS - Fundamental review of the trading book - interim impact analysis
The Basel Committee on Banking Supervision published the results of its interim impact analysis of its fundamental review of the trading book. The report assesses the impact of proposed revisions to the market risk framework set out in two consultative documents published in October 2013 and December 2014. Further revisions to the market risk rules have since been made, and the Committee expects to finalise the standard around year-end.
BIS - Digital currencies
Digital currencies, and especially those which have an embedded decentralised transfer mechanism based on the use of a distributed ledger, are an innovation that could have a range of impacts on various aspects of financial markets and the wider economy. These could include potential disruption to business models and systems, as well as facilitating new economic interactions and linkages. This report considers the possible implications of interest to central banks arising from these innovations.
CFTC Unanimously Approves Proposed Rule on Automated Trading
The U.S. Commodity Futures Trading Commission (Commission) unanimously approved proposed rules that mark a comprehensive regulatory response to the evolution of automated trading on U.S. designated contract markets (DCMs). The proposed rules, known collectively as Regulation Automated Trading or Regulation AT, represent a series of risk controls, transparency measures, and other safeguards to enhance the U.S. regulatory regime for automated trading. The notice of proposal will be open for a 90-day public comment period.
CFTC Staff Releases Swap Dealer De Minimis Exception Preliminary Report
Staff from the Division of Swap Dealer and Intermediary Oversight and the Office of the Chief Economist of the U.S. Commodity Futures Trading Commission (CFTC or Commission) today issued a Preliminary Report regarding the swap dealer de minimis exception. Under CFTC rules, market participants who exceed $8 billion in gross notional swap dealing activity over a twelve-month period are required to register with the Commission as swap dealers during the phase-in period currently in effect. This phase-in period is scheduled to end, and the threshold will fall, to $3 billion in December 2017, unless the Commission takes action to amend the de minimis exception.
SEC Proposes Rules to Enhance Transparency and Oversight of Alternative Trading Systems
The Securities and Exchange Commission announced it has voted to propose rules to enhance operational transparency and regulatory oversight of alternative trading systems (ATSs) that trade stocks listed on a national securities exchange (NMS stocks), including "dark pools." "Investors and other market participants need more and better information about how alternative trading systems work," said SEC Chair Mary Jo White. "The proposed changes would represent a critical step forward in delivering greater transparency to investors and enhancing equity market structure."
CFTC to Discontinue Collecting and Issuing Reports on Index Investment Data
The U.S. Commodity Futures Trading Commission (CFTC or Commission) announced that it will discontinue the collection and release of the monthly Index Investment Data Report (IID Report) for select commodity index position data. This data collection predates the enhanced reporting regime implemented by the Dodd-Frank Act and the IID Reports are not being utilized when compared to larger Commission reporting initiatives. The final release of the IID Report will be issued on November 25, 2015, for data collected from the month of October 2015.
New York Fed - Reforming culture and behaviour in the financial services industry: workshop on progress and challenges
This year's workshop focused on leading practices, common challenges, and the opportunities for industry collaboration.
EBA 5th year Anniversary Conference
The European Banking Authority (EBA) will mark its first five years of activities with a conference on the achievements and remaining challenges in strengthening the banking sector of the European Union (EU) and supporting the effective functioning of the Single Market. The EBA 5th anniversary conference will take place on 5 February 2016 and will be hosted by the Lord Mayor of the City of London in the historical setting of the "Guildhall". Discussions will benefit from the participation of high level policy makers, industry representatives, academics and other stakeholders from across the EU and beyond.
EBA consults on criteria for a preferential treatment in cross-border intragroup financial support under LCR
The European Banking Authority (EBA) launched a public consultation on draft Regulatory Technical Standards (RTS) related to liquidity requirements for cross-border intragroup financial support under stress conditions. The purpose of these RTS is to specify the additional objective criteria listed in the Delegated Act (Commission Delegated Regulation EU No 2015/61 of 10 October 2014), for the application of a preferential treatment in the calculation of the liquidity coverage requirement (LCR) for cross-border intragroup liquidity flows. The consultation runs until 13 January 2016.
ESMA will not exempt the collateralisation of bank guarantees for energy derivatives under EMIR
The European Securities and Markets Authority (ESMA) has decided not to further extend the existing grace period of three years for the non-financial firms' use of non-collateralised bank guarantees to cover transactions in energy derivatives cleared by European central counterpar-ties (CCPs). ESMA therefore reminds firms concerned that from 15 March 2016 CCPs author-ised under the European Market Infrastructure Regulation (EMIR) will need to fully collateralise commercial bank guarantees used to cover transactions in derivatives relating to electricity or natural gas produced.
MiFID: ESMA makes available pan-EU data on suspensions and removals from trading
The European Securities and Markets Authority (ESMA) has launched a new database which makes available information on suspensions and removals from trading including restoration details that national supervisory authorities have to notify under the Markets in Financial Instruments Directive (MiFID).
ESMA consults on the validation and review of CRAs' methodologies
The European Securities and Markets Authority (ESMA) has published its Discussion Paper (DP) on the validation and review of Credit Rating Agencies' (CRAs) methodologies. The DP provides background on validation practices in the credit rating industry, shares good practice observed by ESMA in its recent supervisory investigation in validation and seeks stakeholders' views on the validation and review of CRAs' methodologies.
ESMA Chair and ED give statements to ECON on leading ESMA for a further 5 years
Steven Maijoor and Verena Ross, the European Securities and Markets Authority (ESMA) Chair and Executive Director respectively, have delivered statements to the Economic and Monetary Affairs Committee (ECON) at the European Parliament today on why they wish to continue to lead ESMA, outlining ESMA's future strategy.
The Bank of England - Contractual stays in financial contracts governed by third-country law
This Prudential Regulation Authority (PRA) policy statement (PS) provides feedback to responses to CP19/15 'Contractual stays in financial contracts governed by third-country law'. It sets out final rules intended to both reduce the risk of contagion from the failure of a relevant firm and support its orderly resolution by ensuring that resolution action taken in relation to a relevant firm would not immediately lead to the early termination of its financial arrangements (or those of its subsidiaries) governed by third-country law while similar financial arrangements governed by the laws of the United Kingdom or another European Economic Area (EEA) jurisdiction are stayed.
Publication of the PRA and FCA review into the failure of HBOS
The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) are publishing the review into the failure of HBOS Group.
FCA publishes terms of reference for asset management market study
The Financial Conduct Authority (FCA) has set out the areas it will focus on in its market study into competition in the asset management industry. Over the next year the FCA will assess:How asset managers compete to deliver value; Whether asset managers are motivated and able to control costs along the value chain; and What effect investment consultants have on competition for institutional asset management.
FCA - Call for Input: Supporting the development and adoption of RegTech
The FCA are seeking views on how we can support the development and adoption of new technologies that facilitate the delivery of regulatory requirements - so-called 'RegTech'.