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ASIFMA Asia Regulatory Review

27 OCTOBER 2015 | Issue 274


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!



China's Record Capital Outflows Put Tobin Tax Back on the Agenda
China has for the second time this month raised the possibility of taxing foreign-exchange transactions as record capital outflows from the world's second-largest economy put pressure on the yuan. "We are currently studying measures including Tobin Tax, unremunerated reserve requirement and handling fees for foreign-exchange trading to suppress any abnormal and significant flows of short-term funds that seek arbitrage," Wang Xiaoyi, deputy administrator of the State Administration of Foreign Exchange, said Thursday at a press conference in Beijing. Central bank Deputy Governor Yi Gang called for such punitive measures to be introduced to deter currency speculators in China Finance magazine, a People's Bank of China publication. (Bloomberg)

Shanghai Stock Exchange steps up information disclosure to curb speculation
The Shanghai Stock Exchange has strengthened requirements on information disclosure to curb speculation, asking listed firms to be specific about announcements that could affect stock prices. The Shanghai Stock Exchange said this week that it requires companies listed on the exchange to make detailed disclosures about risks and avoid overly positive statements about new share offerings, strategic agreements and name changes. (Xinhua)

Moving on from the joint venture era: foreign fund managers can sling it alone in China with private fund licence
British fund manager Aberdeen Asset Management is due to be granted a private fund manager licence in China, signifying foreign fund managers will no longer need to go into joint ventures and can operate at 100 per cent shareholding in their investment businesses.
The fund manager will receive a private fund licence for its wholly-owned foreign enterprise (WFOE) setup in Shanghai. (SCMP)


The Hong Kong Government - Revised capital rules for banks gazetted
The Banking (Capital) (Amendment) Rules 2015 was gazetted to introduce some miscellaneous refinements to the principal Rules. The amendments align certain aspects of the Banking (Capital) Rules more closely with the relevant Basel III standards, addressing several technical details noted in an earlier evaluation by the Basel Committee on Banking Supervision on Hong Kong's capital regime. A spokesman for the Financial Services and the Treasury Bureau said, "As an international banking and financial centre, Hong Kong supports the consistent implementation of the international standards across all Basel Committee member jurisdictions. The latest refinements will align our capital rules for banks more closely with the international standards."

HKMA - Implementation of Enhanced Competency Framework for Private Wealth Management ("PWM") Practitioners ("ECF")
Following the announcement of the launch of the ECF in June 2014, and with the concerted efforts of the Hong Kong Monetary Authority ("HKMA"), Private Wealth Management Association ("PWMA"), The Hong Kong Institute of Bankers, and Hong Kong Securities and Investment Institute, the initial training programmes and examinations for the ECF have commenced in phases since October 2014 and January 2015 respectively. To encourage private banks to plan ahead and to monitor the progress of their staff members in meeting the ECF benchmark, the HKMA has also commenced a half-yearly survey to collect information from private banks about their implementation progress and plans.

SFC - Keynote address at 2015 ISDA Annual Asia Pacific Conference
Speech by Mr Ashley Alder, Chief Executive Officer.

HKEx proposes to build "London-Hong Kong Connect"
Hong Kong Futures Exchange Limited (HKFE), HKFE Clearing Corporation Limited (HKCC), the London Metal Exchange (LME) and LME Clear Limited (LME Clear), subsidiaries of Hong Kong Exchanges and Clearing Limited (HKEx) and members of the HKEx Group, signed a non-binding memorandum of understanding (MOU) for the proposed development of a trading link between HKFE and the LME and a clearing link between HKCC and LME Clear, to be named "London-Hong Kong Connect". The MOU was signed as part of the cooperation initiatives announced in a ceremony led by Chinese President Xi Jinping and British Prime Minister David Cameron.


MAS - Macroeconomic Review October 2015
The purpose of the Review is to provide information on the Economic Policy Group's background analysis and assessment of GDP growth and inflation developments in the Singapore economy, and in doing so, to share with market participants, analysts, and the wider public the basis for the policy decision articulated in the MPS.

MAS - Guidance on Anti-Money Laundering and Countering the Financing of Terrorism Controls in Trade Finance and Correspondent Banking
In the National Risk Assessment report published in January 2014, MAS had identified the anti-money laundering and countering the financing of terrorism ("AML/CFT") controls for trade finance and correspondent banking as areas where there could be scope for improvement. Robust controls in these areas enable banks to better prevent and detect the risks associated with trade-based money laundering , proliferation financing and other sanctions compliance related issues. This paper aims to provide banks with guidance on the AML/CFT controls in trade finance and correspondent banking activities, assist them in their benchmarking against industry norms and in the implementation of sound risk management practices, and identification of control gaps. The observations were drawn from MAS' on-site inspections and off-site reviews.


CFTC Issues Order of Exemption from Registration as a Derivatives Clearing Organization to Japan Securities Clearing Corporation
The U.S. Commodity Futures Trading Commission (Commission) issued an order of exemption from registration as a derivatives clearing organization (DCO) to Japan Securities Clearing Corporation (JSCC). The Commission issued this order based on its authority under Section 5b(h) of the Commodity Exchange Act.

Designing Scenarios in Macro Stress Testing at the Bank of Japan
This document explains the framework of scenario design as well as the narratives and rationale behind the developing of scenarios and provides in detail the scenario employed in the October 2015 issue of the Financial System Report. To help financial institutions develop their own stress testing, the main variables in each scenario are available for downloading from the Bank of Japan's web site.

The Bank of Japan - Financial System Report (October 2015)
The report outlines Japans Functioning of the financial system; Stability of the financial system; and Challenges from a macroprudential perspective.


Reserve Bank of India plans IT unit to check cyber threats

The Reserve Bank of India (RBI) expects its plans to set up a information technology subsidiary for checking cyber threats, to take shape in the next six to eight months, its Governor Raghuram G Rajan said. The subsidiary will have experts from the IT domain to check possible threats and also help the central bank to use technology in regulation and supervision, he said. "The setup of an IT subsidiary will help up on issues such as the cyber security and evaluate the technical capabilities of banks," Rajan said. "With banks planning for paperless banking system, which is largely IT dependent, a dedicated IT subsidiary is needed to stay ahead of cyber criminals." (Yahoo)

SEBI - Risk management for Regional Commodity Derivatives Exchanges
This circular applies to Regional Commodity Derivatives Exchanges as defined in the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations, 2015. Exchanges shall comply with the following norms latest by April 1, 2016.


Council of Financial Regulators - Evolution of the BBSW Methodology
The Council of Financial Regulators (CFR) is seeking views on the evolution of the methodology for the bank bill swap rate (BBSW) benchmark. BBSW is a key financial benchmark in Australia and is administered by the Australian Financial Markets Association (AFMA). The closing date for submissions is 3 December 2015.

RBA - The Transition to Central Clearing of OTC Derivatives in Australia
Speech by Malcolm Edey, Assistant Governor (Financial System).

ASIC publishes results of new reviews of high-frequency trading and dark liquidity
ASIC released a report examining the impact of high-frequency trading on Australian equity and futures markets and dark liquidity on Australian equity markets.


CFTC Issues Order of Exemption from Registration as a Derivatives Clearing Organization to Korea Exchange, Inc.
The U.S. Commodity Futures Trading Commission (Commission) issued an order of exemption from registration as a derivatives clearing organization (DCO) to Korea Exchange, Inc. (KRX). The Commission issued this order based on its authority under Section 5b(h) of the Commodity Exchange Act.


OJK relaxes rule to help Islamic banks develop
The Financial Services Authority (OJK) expects that its new relaxation on Islamic banking included in the government's fifth economic policy package will help the industry grow better, its officials say. OJK head of sharia banking department Ahmad Buchori said the agency was still expecting that the country's sharia banking industry could get away from its "5 percent trap" through more lenient policy in various aspects. (Jakarta Post)


Ninth Meeting of the Financial Stability Board Regional Consultative Group for Asia
The Hong Kong Monetary Authority hosted the ninth meeting of the Financial Stability Board (FSB) Regional Consultative Group for Asia in Hong Kong SAR. At their meeting, members of the FSB Regional Consultative Group for Asia began by reviewing the FSB's policy priorities and work plan. This was followed by a discussion of vulnerabilities and financial stability issues during which members exchanged views on global and regional macroeconomic and financial market developments, their potential impact on Asia and possible policy responses. In particular, they considered the implications of rising debt against the prospect of the normalisation of US monetary policy. Members also noted the potential for cybersecurity threats as a growing financial stability risk which warrants close attention.

BIS - Frequently asked questions on the Basel III Countercyclical Capital Buffer
To promote consistent implementation of the Basel III countercyclical capital buffer, the Basel Committee on Banking Supervision has issued frequently and other supporting information. The information published today includes a list of all prevailing and pre-announced buffers, as well as developments related to domestic rule-making. The information is presented for both Basel Committee member jurisdictions, as well as select non-member jurisdictions. The countercyclical capital buffer requirement, when activated by member jurisdictions, will be phased in from 1 January 2016.


CFTC - Keynote Remarks of Chairman Timothy Massad before the Swap Execution Facility Conference
Topics addressed: Swaps Trading Today; SEF Registrations; Fine-Tuning Rules to Improve Trading; Straight-Through Processing and Post-Trade Affirmation; Data Reporting; and Mutual Recognition of Trading Platforms.

CFTC - Keynote Address of CFTC Commissioner J. Christopher Giancarlo before the 2015 ISDA Annual Asia Pacific Conference
Top-Down Financial Market Regulation: Disease Mislabeled as Cure

CFTC - Keynote Remarks of Chairman Timothy Massad before the Risk USA Conference
Topics addressed include Clearing; Clearinghouse Resiliency; E.U. Equivalence; Supplementary Leverage Ratio; Oversight of Major Market Players; Margin for Uncleared Swaps; Automated Trading; Harmonizing and Standardizing Reporting and Reporting of Cleared Swaps.


EBA, EIOPA and ESMA consult on anti-money laundering and countering the financing of terrorism
The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) launched a public consultation on two anti-money laundering and countering the financing of terrorism (AML/CFT) Guidelines. These Guidelines promote a common understanding of the risk-based approach to AML/CFT and set out how it should be applied by credit and financial institutions and competent authorities across the EU. The documents are part of the Joint Committee's work to establish consistent and effective, risk-based supervisory practices across the EU.

EBA publishes final templates and instructions for the Quantitative Impact Study on the definition of default
The EBA published the final set of templates and instructions that institutions participating in the Quantitative Impact Study (QIS) on the definition of default should complete and submit to their respective Competent Authorities (CAs) by 10 December 2015 at the latest.

ESMA publishes translations of its Guidelines on the application of definitions C6 and C7 under MiFID I
The European Securities and Markets Authority (ESMA) has published translations of its Guidelines on the application of the definition of commodity derivatives and their classification under C6 and C7 listed in Section C, Annex I of MiFID I. The purpose of these Guidelines is to ensure a common, uniform and consistent application of these definitions.

ESMA prepares for entering into force of amended Transparency Directive
The Transparency Directive (TD), which creates a common basis for disclosure and dissemination of regulated information to the markets on a regular and on-going basis, was amended in 2013 and enters into force on 26 November 2015. In order to promote the implementation and contribute to a harmonised EU application, ESMA has published four documents relating to the amended TD.

The Bank of England - The PRA Rulebook: Fees
This consultation paper (CP) sets out the Prudential Regulation Authority's (PRA) proposals to redraft the FEES module of the Handbook to conform to the Rulebook style. This CP is part of a planned series of consultations aimed at replacing the PRA Handbook (the Handbook) material inherited from the Financial Services Authority with a standalone PRA Rulebook (the Rulebook). It reflects the commitment made in the PRA's approach documents to create a clear, concise set of rules specific to the needs of PRA authorised firms.

Bank of England publishes approach to stress testing the UK banking system
The Bank of England has published its approach to stress testing the UK banking system. This approach aims to provide clarity for firms and the wider public about our plans for stress testing for the next three years until 2018.

The Bank of England - Market liquidity and market-based financing
Speech by Sir Jon Cunliffe.

The Bank of England - Progress on prudential regulation and three areas to complete
Speech by Andrew Bailey.


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