Singapore: RMB-related initiatives mooted
The Monetary Authority of Singapore proposed on October 27 allowing China-incorporated financial institutions to issue Rmb-denominated debt instruments in the Lion City directly. The aim is to diversify long-term funding for Chinese financial institutions by allowing them to tap into the international institutional investor base in Singapore.
China and Singapore have also agreed to strengthen cooperation on issues related to their capital and derivatives markets and insurance sectors, such as exploring collaborative initiatives in catastrophe risk insurance
Singapore is also looking to ink further agreements with China to develop its Rmb market; this follows the start of Singapore dollar-renminbi trading yesterday.
This also follows the introduction of Rmb/dollar futures on the Singapore Exchange on October 20.
Transaction volume reached 1,836 contracts, or Rmb1.1 billion ($180 million) in notional value on the first day of trading.
Korea: Regulation seen hindering financial firms
An increasing number of regulations is hindering the finance industry in Korea, a senior lawmaker was quoted as saying in the Financial Times.
The number of regulations had increased to 1,099 by September this year from 918 in 2009, said a report by Kim Jong-hoon, a member of the National Policy Committee, quoting figures taken from a report he authored.
Kim’s concern was mirrored by an English-language article in newspaper Korea Joongang Daily, which included details from a report by the Federation of Korean Industries. Almost two-thirds of financial firms in Korea say regulation is hindering growth, the survey reportedly found.
The Korean paper also quoted the chief executive of a foreign fund house as saying the industry was already well regulated. The executive criticised authorities for conducting too many investigations, “which makes financial institutions feel that the government is too demanding”.
He added that financial firms are finding it difficult to comply with every detail of new regulations, as there are “countless different and novel financial products being developed in pursuit of higher profits”.
Australia: Asic sets out priorities
The Australian Securities and Investments Commission (Asic) has published a new report highlighting the areas it will focus on in 2015. They include risks associated with globalisation, increasing product complexity, technology and gatekeeper conduct.
Structural changes in the market, including in the superannuation segments, have also been flagged as areas requiring attention given that people will move from the accumulation phase to the drawdown phase of superannuation.
Asic expects assets managed by the superannuation segment to rise to over A$6 trillion ($5.3 trillion) by 2035 from A$1.6 trillion in 2013.
The securities regulator noted that the asset management sector is consolidating. Four major banks account for around 60% of total industry revenue in 2013-14, it said, and this figure is likely to grow as smaller fund managers are acquired by banks.
“Vertical integration in banking and along the product distribution chain continues to pose challenges,” the report said. “Advisers may persuade investors and financial consumers to invest in in-house products when that may not be in their best interests.
Asic’s budget is being cut over the next four years by a total of A$120 million ($112 million).
“Our deregulatory focus means we will continue to reduce red tape – for example, by providing relief where we assess it is warranted and identifying and removing redundant forms or processes that provide little regulatory benefit,” said chairman Greg Medcraft.
China: CSRC to tighten stock-delisting rules
The China Securities and Regulatory Commission is moving to strengthen its delisting rules as part of a drive to introduce more market-orientated policies, the rule of law and standardised rules.
The securities regulator laid out the reforms in guidelines published on October 17, and they are slated to take effect on November 17.
For example, the changes seek to clarify circumstances in which a stock that has been suspended for a year can be considered for delisting – one instance being fraudulent practices at the time of its issue.
Chinese news agency Xinhua reported that the current rules for delisting focus mainly on companies’ financial performance. For example, if a company reports losses for three consecutive years, it faces suspension. Since 2001, 78 companies have been delisted under the existing regime.
China: Insurers cleared for preferred shares investment
The China Insurance Regulatory Commission (CIRC) on October 17 relaxed rules to allow insurance companies to invest in preferred shares issued by firms that have at least a single-A credit rating from a CSRC-approved agency.
CIRC said it changed the rules to implement the State Council’s stated aim of encouraging insurers to make more long-term investments.
This follows the move in March by the China Securities Regulatory Commission to allow Shanghai Stock Exchange 50 index companies to issue preferred shares for the first time.
Bank of China was the first state bank to issue preferred stock in the offshore market, and Agricultural Bank of China plans to issue preferred shares by the end of this year.
Hong Kong/China: ICI Global welcomes Stock Connect MoU
London-based industry body ICI Global has welcomed closer cooperation between the Chinese and Hong Kong securities regulators over issues including those surrounding the Shanghai-Hong Kong Stock Connect.
The China Securities Regulatory Commission and Hong Kong’s Securities and Futures Commission signed a memorandum of understanding (MoU) on improving cross-boundary regulatory and enforcement cooperation on October 17.
The areas covered by the MoU include the sharing of information regarding suspected wrongdoing in either market and the establishment of committees for joint investigations.
But uncertainty remains over Stock Connect, the planned trading link between the two cities that will allow trading of Shanghai-listed stocks through Hong Kong and vice versa. On October 27 the launch – originally planned for this month – was officially postponed with no target date specified.
France/Hong Kong: Central banks sign MoU on RMB business
The Hong Kong Monetary Authority and the Banque de France yesterday signed an MoU in Paris to strengthen cooperation between the two entities on the renminbi.
The agreement will see the two central banks work together to promote the use of the currency by financial firms and other companies in Hong Kong and Paris. Issues they will tackle include trade and investment, liquidity flows, the availability of financial products and services, as well as collaboration on transaction infrastructures.
Other recent regulatory news reported by AsianInvestor: