AsianInvestor's regulatory roundup, Mar 5
Europe: Ucits V bonus rules said to affect Asia
The European Council and the European Parliament have agreed to rules on the latest incarnation of the Ucits fund structure, according to law firms’ client reports.
One of the most significant proposals in under the fifth version of the Undertakings for Collective Investment in Transferable Securities concerns remuneration.
Specifically, at least 50% of a Ucits manager’s bonuses will be payable in shares in the fund(s) they manage. In addition, 40% of the bonus will have to be deferred for at least three years.
The Financial Times quotes market participants as saying that the Ucits V rules are likely to affect US and Asian fund managers. Last-minute amendments were made so that “any third parties to whom functions have been delegated” will also have the rules apply to them, according to the FT report.
Europe: FTT deal still on the table
French president Francois Hollande is reported as saying on February 19 that the financial transaction tax is still on the table and the aim is to have an agreement in place between now and the European parliament election set for May 25.
“The principle is that the tax will be applied,” he said at a media gathering alongside German chancellor Angela Merkel. “I prefer an imperfect tax than no tax at all.”
While the tax – proposed at 0.1% and 0.01% for share and derivative trades, respectively – mainly affects the 11 eurozone member states, some commentators suggest it will also affect Asia. For example, Asian fund houses buying or selling European securities or dealing with a European broker may face the tax as well.
Hong Kong: SFC issues third-quarter report
Hong Kong’s Securities and Futures Commission (SFC) last week published its quarterly report detailing the regulatory work it did in the fourth quarter of 2013.
The number of authorised collective investment schemes has dropped slightly. At the end of 2013, there were 2,459 such schemes available to investors, down 1.7% year-on-year from end-2012, when there were 2,501.
One driver of this was a 2.7% YoY drop in the number of unit trusts and mutual funds. By end-2013 there were 1,792 such products available, compared to 1,842 the previous year.
On the funds authorisation front, the SFC approved four unlisted renminbi qualified foreign institutional investor (RQFII) funds and three RQFII A-share ETFs in Q4. By the end of December, there were 11 SFC-authorised RQFII A-share ETFs and 26 authorised RQFII unlisted funds.
Meanwhile, the regulator received 1,581 licence applications between October and December, down 18% from the previous quarter but up 20% compared with Q4 2012. As at December 31, the total number of licensees and registrants remained stable at around 39,000.
A separate report by law firm Freshfields Bruckhaus Deringer said there were around 85 SFC regulatory actions and settlements in 2013, up from 58 the year before.
“In 2013, the regulatory watchdog has again demonstrated its readiness to take decisive measures to ensure compliance with market regulations,” says the January report. “Enforcement within Hong Kong and throughout the region will continue to become more sophisticated as the resourcing of, and co-operation between, agencies continues to increase.”
Korea: Regulator announces pension plans for 2014
Korea’s Financial Services Commission has published its objectives for 2014, which include plans to develop new pension products, such as for the disabled, low-income earners and baby-boomer retirees.
One example is a new pension insurance scheme for the disabled, due for launch in April. Policyholders will pay lower-than-average insurance premiums while receiving higher redemptions during pensionable age.
The Korean regulator is also considering policy incentives such as tax exemptions to encourage more low-income earners and baby-boomers to sign up to pension products.
The overarching goal of the 2014 plan is to instil market discipline, ensure financial system stability and increase Korea’s competitiveness on the global stage.
Specifically, the watchdog is looking to review all financial rules over the past five years since 2008 and analyse whether they are in need of reform. In principal, those that hinder competition will be abolished to encourage financial innovation.
World: Singapore, UK to set up forum on RQFII
Singapore said on February 25 that its finance ministry has agreed to cooperate with the UK’s to support the set-up of a financial forum aimed at building up the offshore renminbi market.
Singapore finance minister Tharman Shanmugaratnam said London and Singapore “can cooperate to promote fungibility of the RMB globally, encourage innovation in RMB products and services and meet the growing appetite for RMB investment instruments”.
The forum, to be led by the private sector, comes after London and Singapore received Rmb80 billion and Rmb50 billion in quota, respectively, to invest in mainland securities last October.
Hong Kong: 3,000 minibond complaints outstanding
Some 19,000 of the 22,000 complaints filed after the mis-selling of Lehman Brothers-backed minibonds have been resolved by way of compensation, said the Hong Kong Monetary Authority on February 26.
The banking regulator had a team of around 300 at its 2009 peak handing complaints resulting from the debacle. The team – of which 100 were permanent staff or secondees from auditors and the other 200 contractors – has now shrunk to 80.
Other regulation-related stories on AsianInvestor.net in the past two weeks:
Brokers voice worries on HK dark pool plans
HK budget hands sweetener to ETF providers