Derivs - Regulation

In this round-up, RMB futures trading on international exchanges picked up in November, RMB clearing in Hong Kong picked up in the same month, ICBC is working on a Belt and Road financing venture, and Deutsche Bank helped a German corporate set up centralised RMB treasury functions in China. Plus, a recap of GlobalRMB’s top stories this week.

The European Union’s Economic and Financial Affairs Council (Ecofin) got 10 of the 11 countries discussing a financial transaction tax to agree on elements of the levy on Tuesday, and are intent on continuing work on the rule in 2016.

The European Commission announced that five countries’ regulatory frameworks for central counterparties (CCP) are deemed equivalent to the union’s European Market Infrastructure Regulation.

The European Union has hit a big setback in its drive to overhaul financial market rules, with its chief markets regulator demanding a delay of as much as a year before implementing its flagship regulation, Markets in Financial Instruments Directive (MiFID II). But market participants greeted the reprieve as a welcome and necessary delay.

The European Union looks to have hit a big setback with its drive to overhaul financial market rules, after accepting that it will have to delay rolling out its MiFID II legislation framework – and possibly by as much a year.

Nine offshore RMB clearing banks have been given approvals from the People’s Bank of China (PBoC) to participate in China’s onshore foreign exchange derivative sector, marking another step in China's capital market liberalisation China’s capital market.

The Financial Stability Board has reported progress in implementing over-the-counter derivatives market reforms, but has also highlighted where it believes further work is needed and is seeking further market feedback.

Easing liquidity conditions supported offers in the very short end of the CNY swap curve on Monday. This drove some disinversion momentum in the 1s/2s NDIRS curve slope that sources expect to continue, writes Deirdre Yeung of Total Derivatives.

In the confusing world of China’s investor access programmes, one thing regulators have made clear is that hedge funds are not welcome. The launch of the Shanghai-Hong Kong Stock Connect gave the industry access the mainland markets, but the recent stock market trouble has seen regulators take a much harder stance.

Individual initiatives by China in the commodity space, such as the July launches in Shanghai of a Gold Connect scheme and a new oil and natural gas exchange, may be gaining little traction right off the bat, but they are pieces in a broader strategy devised by the world's largest consumer of commodities. An upcoming oil futures contract, in particular, could see that plan make a leap forward.

PricewaterhouseCoopers has called for an overhaul of regulations which are hurting market liquidity, as part of a major new report on the state of liquidity in financial markets, commissioned by the Global Financial Markets Association and the Institute for International Finance.

Since adjusting its currency fixing process on Tuesday, the People's Bank of China (PBoC) has overseen the biggest two-day depreciation in the yuan in more than two decades. HSBC has described the CNY swap market sell-off as counterintuitive — and sees current elevated rate levels as an opportunity, writes Maia Ririnui of Total Derivatives.