Asia Regulatory Review | 13 - 20 May 2014

13 - 20 May 2014 | Issue 204 Spotlight Reuters TV - ASIFMA RMB Roadmap The global rise of China's yuan currency is 'inevitable' but will have to be accompanied by serious reforms, according to ASIFMA CEO Mark Austen's 'road map' for yuan internationalization. Narendra Modi, cabinet ministers to take oath on May 24 The Modi sarkar could start working from this Saturday, which, if it happens, will be in keeping with the PM-designate's reputation of being someone who makes no distinction between weekdays and weekends. Narendra Modi and a few key cabinet ministers are most likely to take oath on May 24, which is the auspicious day of Ekadashi as per the Hindu calendar, a senior BJP leader told ET on Monday, ending the suspense over the date of the BJP government's constitution. (Economic Times) Update CHINA New rules issued on interbank business in China The financial regulator in China has issued rules to enhance and improve interbank business in order to contain financial risks and to direct more capital into real economy. The regular, the central People's Bank of China, issued 18 rules this time. In a separate statement, the central bank said: "In recent years, the interbank business of commercial banks has grown quickly, and some banks are conducting their businesses in ways that do not conform to standards." (Xinhua) China to fuel capital market's sound expansion China will continue striving for capital market reform to preserve the rights of medium and small investors and pursue sound development, a senior securities official said Monday. Xiao Gang, chairman of the China Securities Regulatory Commission (CSRC), said that a multi-level equity market should be established as soon as possible. Xiao said that about 100 new shares will be issued from June to the end of this year, with strict supervision and severe punishment for accounts manipulation or false disclosure. (Xinhua) Slowing Property Market Is Banking Risk, CBRC Official Says The country's weakening property market poses risks to the banking system, an official with the China Banking Regulatory Commission (CBRC) recently said at a meeting of the regulator. The overall quality of property loans has remained stable, but a few risks have appeared and require close attention, the official said. One risk stemmed from mounting oversupply, as some cities have built more homes than people can buy in a short period, he said. (Caixin) APEC roadmap to plan free trade area A ministerial meeting of Asia-Pacific Economic Cooperation (APEC) has reiterated the resolution to draft a roadmap concerning the establishment of a Free Trade Area of the Asia-Pacific (FTAAP). The annual APEC Ministers Responsible for Trade Meeting, which wrapped up Sunday in China's eastern city of Qingdao, released a statement saying the move formed part of "concrete steps towards eventual realization of an FTAAP." (Xinhua) HONG KONG Hong Kong and China to establish stock connect regime The Hong Kong Financial Services and the Treasury Bureau (FSTB) has announced that the Hong Kong and Chinese Mainland regulatory authorities will form a regime under the Shanghai-Hong Kong Stock Connect to address misconduct. The Hong Kong and Shanghai stock exchanges will each establish a subsidiary in the other market to receive orders from their participants to trade eligible shares and route them onto the trading platforms of the other exchange for execution. HKMA Implementation of Basel III - Quarterly Template for Reporting of Leverage Ratio The HKMA finalised the leverage ratio reporting package for local incorporated authorised institutions to report their leverage positions to the Authority on a quarterly basis. The first submission of the completed templates should cover the positions of both end-December 2013 and end-March 2014. SFC Circular to all Licensed Corporations and Registered Institutions concerning the U.S. Foreign Account Tax Compliance Act The Securities and Futures Commission (SFC) has issued a circular to update licensed corporations and registered institutions on the progress in the discussions between the governments of the Hong Kong SAR and the United States of America in relation to the conclusion of an inter-governmental agreement (IAG) which is intended to facilitate financial institutions in Hong Kong to comply with the Foreign Account Tax Compliance Act (FATCA). HKEx to Host RMB FIC Market Strategy Forum on 22 May Hong Kong Exchanges and Clearing Limited (HKEx) is hosting a renminbi (RMB) fixed income and currency (FIC) market strategy forum on Thursday, 22 May 2014 in Hong Kong. Market leaders, including senior executives from banks, product providers and institutional investors, will discuss the latest trends in RMB-denominated fixed income products, the RMB's value versus other currencies, global regulatory policy and its impact on Hong Kong, and developments in over-the-counter market clearing, or OTC clearing. SINGAPORE Singapore GDP Growth Forecast in 2014 Maintained at 2.0 to 4.0 Per Cent The Singapore economy grew by 4.9 per cent on a year-on-year basis in the first quarter, similar to the rate of growth achieved in the previous quarter. INDIA Banks can sell all structured derivatives abroad: RBI The Reserve Bank of India (RBI) on Monday said banks could offer structured derivatives through foreign branches even if these products weren't allowed in India. The central bank, however, added these products could only be sold in established financial markets. (Business Standard) RBI Working Paper - Stability of Real Effective Exchange Rate Important for Sustaining Growth of Industrial Production The paper focuses on the impact of exchange rate volatility on industrial growth in the context of the increasing integration of India's industrial sector with global economy through higher export and import intensity. The paper also explores the implications of exchange rate volatility on the use based components of the index of industrial production (IIP) using EGARCH methodology for calculating volatility of real effective exchange rate (REER). Risk management framework for Foreign Portfolio Investors (FPI) under the SEBI (Foreign Portfolio Investors) Regulations, 2014 The SEBI (Foreign Portfolio Investors) Regulations, 2014 were notified on January 07, 2014 and shall commence with effect from June 01, 2014. JAPAN Kuroda Keeps BOJ Easing Hopes Alive Bank of Japan Gov. Haruhiko Kuroda sounded a more positive note than usual on further easing action, ratcheting up his commitment to leave years of deflation behind. While Mr. Kuroda stuck to his usual mantra of saying he won't hesitate to act if needed, in remarks made Thursday, he went beyond previous comments by saying there were plenty of tools available should it become necessary to take action, prompting a slight rise in the dollar against the yen. (WSJ) Japan's Tibor rate comes under scrutiny A Japanese lawmaker is querying "unnatural movements" in Tibor, the rates that underpin trillions of yen of loans in Japan, challenging the financial regulator to get a better grip on the rate-submission process. Banks and brokerages have been investigated by regulators and watchdogs around the world for attempting to rig benchmark rates such as Libor and Euribor. Japan has joined in too, as the Financial Services Agency has punished the local arms of three investment banks for tampering with offshore rates, while promising in December to award itself powers to punish attempts to manipulate Tibor. (FT) AUSTRALIA The 2014-15 budget and sustaining broad based growth in living standards Speech to the Australian Business Economists by Dr Martin Parkinson, Secretary to the Treasury. Government rolls out biggest infrastructure program The Abbott Government will roll out the nation's biggest infrastructure program to strengthen the economy, ease congestion, cut travel times and create thousands of new jobs. The Abbott Government will establish an Asset Recycling Fund to build productive infrastructure on 1 July 2014. NEW ZEALAND The White House Statement by the Press Secretary on the Visit of Prime Minister John Key of New Zealand President Obama will welcome New Zealand Prime Minister John Key back to the White House on June 20, 2014. The meeting will highlight our increasingly close relationship with New Zealand and our collaboration on the Trans-Pacific Partnership, climate change, and military-to-military cooperation. THAILAND Thailand army declares martial law The Thai army says that it is imposing martial law amid a political crisis "to preserve law and order". The surprise announcement also granted the army wide-ranging powers to enforce its decision. (BBC) INDONESIA Battle lines drawn for Indonesia's presidential election The battle lines in Indonesia's transformative presidential election finally became clear on Monday after weeks of speculation and horse-trading. Voters will face a stark choice in July between Joko Widodo, the softly spoken Jakarta governor, and Prabowo Subianto, a former general and self-styled strongman. (FT) INTERNATIONAL Plans to de-risk 'too-big-to-fail' banks face hurdles in Europe, Asia Global plans to prevent taxpayers from having to pay for big bank failures are at risk because banking supervisors in Europe and Asia do not fully support some of the proposals aimed at drawing a line under the 2007-2008 financial crisis. Governments have paid out billions of taxpayer dollars to bail out large banks in trouble because of fears that the fallout from a big collapse would be too damaging. (Reuters) BIS Working Paper: The exit from non-conventional monetary policy: what challenges? Monetary policies pursued in response to the financial crisis have shown that changes in central bank balance sheets have major macroeconomic consequences. The New Classical Macroeconomics, which gained increasing sway from the late-1980s, had led to an exclusive focus on the policy rate and a neglect of balance sheet effects. UNITED STATES Jacob Lew on 'Frank' Talks in Beijing on Yuan, Slowing Economy U.S. Treasury Secretary Jacob Lew paid his third visit to China since taking office last year in mid-May, two months before this year's U.S.-China Strategic and Economic Dialogue (S&ED) in Beijing. During his 40-hour visit to the Chinese capital, Lew met Premier Li Keqiang, Vice Premier Wang Yang and a number of other high-level officials. At the center of discussions was the yuan exchange rate. Before he departed for China, Lew said he would press Chinese officials for a more market-oriented exchange rate, adding there had been "negative movement" in recent months. (Caixin) EUROPE EU Commission publishes review of financial regulation reform agenda The EU Commission has published a Communication entitled 'A reformed financial sector for Europe', which presents the Commission's first comprehensive review of the European financial regulation agenda as a whole. EBA publishes opinion on measures to address macroprudential or systemic risk The European Banking Authority (EBA) has published an opinion following the notification by the National Bank of Belgium (NBB) of its intention to modify capital requirements in order to address an increase in macroprudential or systemic risk that could have a severe impact on the financial system and the Belgian real economy. BoE urges more transparency in clearing The Bank of England has urged clearing houses and large broker-dealers to publish their derivatives risk calculations, warning that more transparency was necessary to avoid future potential systemic risks. The central bank, which monitors one of the world's largest derivatives markets, sounded its warning in a white paper published on Friday that examined the impact of margin calls on stressed markets. (FT) Bank of England's Mark Carney highlights housing market's risk to UK economy UK housing market has 'deep, deep structural problems', says governor, and there is little the Bank can do. (The Guardian) Features ASIFMA Homepage ASIFMA Careers ASIFMA Events Data Australian Mortgage Insurance Companies: A Scorecard Update Banking System Profile: India China as the Largest Economy in EM Global Macro Outlook 2014-15 Infrastructure Default and Recovery Rates Korean Electricity Industry Aussie Budget Enhances Long-Term Sovereign Risk Profile Fitch Affirms Japan at 'A+'; Outlook Negative Fitch Upgrades Panasonic to 'BBB-'; Stable Outlook Sony's Turnaround, Return to Investment Grade Still Distant Chinese Data Highlight Risks from Property Slowdown China Homebuilders' Restructuring Boosts Competition; Mitigates Oversupply Climate Change Is A Global Mega-Trend For Sovereign Risk Potential Downgrades Outnumber Potential Upgrades In Asia-Pacific During March Australian Infrastructure Funding: Making Strides Ratings On New Zealand Unaffected By Government's 2015 Budget Ratings On Australia Not Affected By Government's Fiscal 2015 Budget FATCA IGA Status Contacts Eric Tang    Publications GFMA Daily Smartbrief GFMA Weekly Update ARR Archive Subscriber Tools Lead Editor: Eric Tang                                                                          subscribe     share     SEND FEEDBACK Change e-mail address  |  Unsubscribe In accordance with our Privacy Policy, we occasionally distribute information and announcements that are relevant to the development of capital markets in Asia to our ASIFMA Regulatory Review distribution list.