Initiatives - Asia

 


China

  1. Establish a formal securitization program and with clear rules.
  2. Advocate amendment of the Business Tax rules as they apply to trading in financial instruments.
  3. Achieve approval for sizeable limits for RMB denominated government bonds cross-border investment by foreign investors.
  4. Establish a government bond futures market.
  5. Develop an expanded and suitably documented “classic repo” market.
  6. Improve creditors’ rights in bankruptcy, especially with respect to close-out netting and cherry picking provisions.
  7. Support the development of Hong Kong based renminbi capital markets.
  8. Level the playing field for foreign banks to be allowed to underwrite domestic RMB corporate bonds (MTN and CP) in the inter-bank (OTC) market.
  9. Allow more foreign owned banks and securities companies to enter into derivatives transactions with corporate clients and obtain market maker or licensed bond settlement agent (level 1) status.

 

Korea

  1. Allow banks and securities houses to short sell (naked short) government bonds (KTBs and MSBs).
  2. Pursue other measures to develop domestic, offshore and cross-border won repo markets.
  3. Simplify the trading, clearing and settlement, and financing and holding of government bonds by foreign investors. In particular, seek allowance of multi-tiered QFI omnibus accounts at the ICSDs, a simplified withholding tax exemption application process and simpler FX rules as applied to cross-border repos.
  4. Promote measures that would eliminate impediments to Korea’s inclusion in the Citibank WGBI.
  5. Eliminate or simplify FX controls.
  6. Seek withholding tax exemptions on won denominated bonds issued by Korean corporations and held by foreign investors.

 

India

  1. Expand the investor base by promoting diverse and active participation through:

    a. Increased FII limits, especially for government securities, and more user-friendly FII procedures, such as simplified quota auction procedures, to encourage long-term investors in government securities;

    b. Elimination of taxes, withheld by custodians before remittances offshore, on government securities, as a priority, and then subsequently for corporate bonds; and

    c. Development of the institutional savings sector and promotion of its investment in bond markets.

  2. Advocate measures that would improve liquidity across the government securities yield curve by:

    a. Allowing government securities received through a repurchase agreement (a “repo”) to be sold or to be repoed again (i.e., allowing “double-ready forwards”) or otherwise to be used for collateral or for securities lending, without any limitation;

    b. Removing limitations on permitted repo transactions by mutual funds. [Note: currently, mutual funds may only provide cash funding to counterparties, in return for bonds, under a repo; they cannot use repos to receive cash funding by providing bonds nor by reselling bonds received under a repo to recover liquidity];

    c. Significantly extending or eliminating 5-day limits on shorting government securities;

    d.Increasing or eliminating the 0.5% limit on shorting any given government securities issue;

    e. Allowing additional market participants, not just banks and primary dealers, to short government securities;

    f. Encouraging market participants to establish and sign a standardized repo contract, such as the GMRA, including an India Annex as appropriate;

    g. Supporting development of short-term futures contracts and a government bond futures market; and

    h. Promoting implementation of interest rate risk and collateral management tools and systems.

  3. Facilitate market consensus on and endorse development of standardized terms and conventions for “plain vanilla” corporate bonds, e.g., an agreed day-count fraction and business day conventions.
  4. Advocate a liquid and active securitization market.
  5. Promote bank issuance of senior debt.
  6. Advocate improved market liquidity through changes to stamp duty and other taxes.

 

Pan Asia or Other

  1. Provide relevant officials with the Asian capital markets industry perspective on global regulatory reforms under discussion at G20, FSB and IOSCO.
  2. Participate in the ADB-led Public Debt Management Office's annual workshop on debt issuance management.
  3. Develop standard arrangements and comfort letters with accounting firms.
  4. Advocate the elimination of withholding taxes on government and corporate bonds.