Australia
The Australian Securities and Investments Commission (ASIC) published a consultation paper on July 20 outlining the regulatory changes needed to allow retail investors to buy and sell Commonwealth Government Securities (CGS).
It is also seeking feedback on whether retail access should also be extended to the corporate debt market.
The Australian government hopes that allowing retail investors to buy CGSs will give them a more visible pricing benchmark for investments they may wish to make in corporate bonds as well as it could further encourage diversifying of their savings into fixed-income products. This, in turn, is expected to facilitate the government’s goal of developing a deep and liquid corporate bond market.
At present, CGS are mainly traded over-the-counter and through trading platforms available exclusively to professional investors.
China
The China Insurance Regulatory Commission (CIRC) relaxed rules regarding what instruments insurance companies can invest in on July 19.
Insurers on the mainland are now allowed to invest in hybrid and convertible bonds for the first time, as well as take a larger position in unsecured bonds.
Additionally, they can invest up to 50% of their total assets into unsecured bonds, up from the previous cap of 20%.
This is the latest reform announced by the CIRC. In May, the regulatory body amended rules so insurers could purchase unsecured corporate bonds from underwriters in earlier stages of a deal’s development, rather than buying them through an open auction. That same month, the regulator also proposed rules that would allow insurers to more broadly invest in securities firms’ wealth management products in an effort to foster new profit-making avenues.
Hong Kong
The Hong Kong Monetary Authority (HKMA) has said that banks in the special administrative region will be allowed to open renminbi (RMB) accounts for non-Hong Kong residents and offer them a full range of RMB services starting from August 1.
Unlike, Hong Kong ID card holders who are restricted to converting up to Rmb20,000 (US$3,131) a day, non-residents will not face any limits on how much they exchange.
This puts Hong Kong’s banks on the same footing as banks in London and Singapore which have not had restrictions on non-residents accessing renminbi banking services.
The Securities and Futures Commission has proposed enhancing the regulatory framework for electronic trading, including internet trading, direct market access (DMA) and algorithmic trading.
The regulator said it wanted to provide a more coherent and comprehensive set of rules in the light of increased electronic trading. It also aims to bring the regulation of DMA activities in line with the standards set by the International Organisation of Securities Commissions (IOSCO).
The consultation is open until September 24.
India
The Reserve Bank of India (RBI) is proposing to reclassify restructured loans as non-performing to bring its regulations up to global standards.
The proposals are expected to improve transparency in the country’s banking system and lead to more accurate pricing of the risk associated with the debt.
Under the proposals, the RBI has recommended that the provision requirement (the amount of capital reserved for each restructured loan) should be gradually increased from 2% to 5% over a two-year period. In addition, the central bank suggests a provision of 5% should be made for any new loan restructures.
Meanwhile, the RBI has also increased the priority sector lending target for foreign banks from 32% to 40%. The change will affect banks with 20 or more branches and is to be phased in over a period of five years from April 1, 2013.
Banks will have to submit an action plan for achieving the targets to the RBI for approval.
The move brings foreign banks in line with state banks which already have a priority sector lending target of 40%.
Priority sector lending includes small value loans to farmers for agriculture and related activities, loans to micro and small enterprises and other low income groups.
The Securities and Exchange Board of India (Sebi) has relaxed rules for qualified foreign investors (QFI).
It has expanded the definition of QFI to include residents of foreign countries that are members of the Financial Action Task Force (FATF) or members of a group affiliated to the FATF, or a signatory to International Organisation of Securities Commissions' (IOSCO) memorandum of understanding (MoU) or a signatory of a bilateral MoU with Sebi.
QFIs can now also invest in corporate debt without any lock-in or residual maturity clause and mutual fund debt schemes subject to a total overall ceiling of US$1 billion. This limit is in addition to the $20 billion ceiling for foreign institutional investors (FII) in corporate debt.
Indonesia
Bank Indonesia (BI) has finalised new bank ownership rules for foreign and domestic investors.
The new rules limit single investor acquisitions to 40% for financial institutions, 30% for non-financial institutions, and 20% for families or individuals. The limit is 25% for individuals and families if the target is an Islamic bank.
BI has also said it will allow higher levels of ownership for if they are a listed bank with a tier one capital ration above 6%. However, the rules exclude state banks.
Philippines
The Asian Development Bank (ADB) announced on July 17 that it will start supporting deals denominated in the Chinese renminbi and Indian rupee under its Trade Finance Program (TFP).
The TFP, which has supported over US$10.6 billion in trade since 2009, used to cover only transactions denominated in US dollars, yen and euros.
ADB’s TFP programme is active in 16 countries, but focuses almost exclusively on taking risk in more challenging markets. TFP’s most active markets have been Bangladesh, Vietnam, Pakistan, Sri Lanka and Nepal, where market liquidity gaps are proportionally the largest.
Singapore
Singapore’s Ministry of Trade and Industry announced on July 6 that two eligible Chinese banks currently operating in Singapore will be granted Qualifying Full Bank (QFB) privileges, one of which will be authorised as a clearing bank for renminbi in Singapore.
The ministry did not name the two Chinese banks in the press release and said that “implementation details will be worked out by the relevant financial agencies in Singapore and China in due course.”
Currently, there are three Chinese banks operating in Singapore, including Bank of China (BoC), Industrial and Commercial Bank of China (ICBC) and China Construction Bank (CCB), none of which are under the QFB license.
QFBs have greater branching privileges and access to the retail market than other foreign banks.
The move is expected to help Singapore capture more renminbi business from Asean (Association of Southeast Asian Nations) corporates.
Taiwan
The Financial Supervisory Commission (FSC) is expected to allow the offshore banking units (OBUs) of Taiwanese banks to invest in offshore renminbi (RMB) bonds issued by the country’s corporates.
Under the current regulations, which were changed several months ago, companies in Taiwan are allowed to issue bonds in the dim sum market through the OBUs of Taiwanese banks, but only through private placements. In addition, OBUs of Taiwanese banks are allowed to invest in offshore RMB bonds, but only those floated via public placements.
Domestic banks are requesting that the FSC of Taiwan revise the law and allow OBUs to underwrite public offshore RMB deals, thus enabling them to use their own funds to invest in the debt.