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NEW YORK - Insurance Department Re-thinks Credit Derivatives Position
In a recent Circular Letter, the State of New York Insurance Department has suggested it is contemplating a fundamental shift in its position with respect to credit derivatives that could have wide-reaching consequences, not only for the credit derivatives market, but for the derivatives industry as a whole.
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HONG KONG - Regulators Crack Down on Issuer Disclosure
Hong Kong's Securities and Futures Commission (SFC) is calling on all issuers of retail investment products to review whether risk disclosure and product descriptions are adequate, given the current market conditions.
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CHINA - SAFE Revises Primary FX Regulations
On August 5, in response to the changing global economic environment and a re-setting of priorities in its foreign exchange policies, the State Council of China issued a set of revised regulations (the New FX Regulations) which came into immediate effect. The New FX Regulations further relaxed regulations on current account items, intensified regulations on capital inflows, adjusted the management of the RMB related exchange rate, and strengthened the enforcement of FX regulations.
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INDIA - Securities Regulator Lifts Curbs on Participatory Notes
The Securities and Exchange Board of India (Sebi) lifted the ban on participatory notes (P-notes) on October 7, removing the requirement imposed in October 2007 forcing investors to register in India before buying shares and limits on offshore derivatives.
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SINGAPORE - MAS Details Resolution for Minibond Investors
The Monetary Authority of Singapore (MAS) has outlined details on the resolution process and timeline for investors in structured products linked to Lehman Brothers.
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GLOBAL - Decision in JP Morgan v Springwell Clarifies Mis-selling Uncertainty
On June 12, a much-anticipated judgment by Mrs Justice Gloster in JP Morgan Chase Bank v Springwell Navigation Corporation [2008] EWHC 1186 concluded that the JP Morgan Chase Group did not owe a contractual or a tortious obligation to Springwell to advise it on the appropriateness of its investments, or on the structure of its portfolio.
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GLOBAL - New Cross-Border Principles for Product Distribution
Five global trade associations released non-binding principles in early July to address a range of issues affecting distribution of retail structured products to individual investors. The principles are intended to complement those released by the same industry bodies 12 months earlier in relation to managing the product provider-distributor relationship.
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SINGAPORE - Singapore to Get Commodities Exchange
Commodities exchanges operator Financial Technologies will set up the Singapore Mercantile Exchange (SMX) early next year to create what it says will be the first international commodity derivatives electronic trading platform in Asia.
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HONG KONG - New Commodities Exchange For Hong Kong
Hong Kong Mercantile Exchange (HKMEx) announced on June 25 the creation of a new commodities exchange in Hong Kong.
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INDIA - Central Bank Suspends Credit Derivatives Rules
Against the backdrop of the credit crisis, the Reserve Bank of India (RBI) decided in mid-June to again put on hold its plans to issue final guidelines on the introduction of credit derivatives.
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INDIA - Securities Regulator Confirms Curbs on Foreigners Using Offshore Derivatives
The Securities and Exchange Board of India (SEBI) has published new regulations confirming the limitations proposed in October 2007 on the issue of offshore derivative instruments (ODIs), or Participatory Notes, by Foreign Institutional Investors (FIIs), including the restriction on new issuance where the total value of ODIs exceeds 40 per cent of the FII's assets under custody.
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ASIA-PACIFIC - Hong Kong and Australia Sign Funds Initiative
Securities regulators in Hong Kong and Australia signed a "declaration of mutual recognition" on July 7 to facilitate the sale of retail funds to investors in each other's market. The declaration seeks to reduce regulatory duplication by allowing most funds registered in Australia for offer to retail investors in Hong Kong, while making available to Australian investors similar funds authorised in Hong Kong.
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Thailand Relaxes Rules on Outbound Investment
On March 12 2008, the Bank of Thailand (BOT) issued a new regulation allowing Thai corporates and individuals to invest in foreign securities.
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Hong Kong Shortens Timeline to Issue Structured Products
The Stock Exchange of Hong Kong Limited recently informed the market that an amendment had been made to shorten the timeline for further issues of structured products issued under Chapter 15A of the Listing Rules by 1 business day. Accordingly, the timeline for further issue of such structured products launched on and after 17 March 2008 is as follows:
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India to Gradually Introduce Currency Futures
The Reserve Bank of India plans to introduce currency futures to give domestic companies a new hedging tool.
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India Clarifies Issuance of Foreign Currency Exchangeable Bonds
Following a press release on February 15 2008 that group companies in India can issue Foreign Currency Exchangeable Bonds (FCEBs) to raise funds abroad, the Ministry of Finance published the Issue of Foreign Currency Exchangeable Bonds Scheme 2008 on its website.
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Malaysia Gives Unit Trusts a Boost
In March 2008, Malaysia’s Securities Commission (SC) has issued revised and new guidelines to facilitate continued growth and enhance competitiveness of the unit trust industry — by providing more flexibility to structure derivative-based products.
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Product Providers Face More Responsibility in Taiwan
The Trust Association of Republic of China (TAROC) has produced a draft Master Agreement for structured securities which aims to outline the terms of the relationship between a provider and a distributor of structured securities.
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Hong Kong Regulator Raises Concern Over Accumulators
Hong Kong’s securities watchdog has responded to growing concern by end-investors over accumulators by strongly encouraging investors to lodge a formal complaint with it where investors believe there has been a breach of the regulations.
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China Cracks Down on Wealth Management Products
China’s banking watchdog has issued new rules to further regulate banks’ wealth management businesses, to improve the way they are run.
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Hong Kong Authorises First Retail Islamic Fund
In support of the Hong Kong government's initiative to develop Islamic finance, the SFC has been working with industry participants to enable the introduction of Islamic financial products to the local market. The regulator recently authorised the first Islamic fund for sale to retail investors in Hong Kong.
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ISDA Publishes Equity Derivatives Lookthrough Guidelines
On December 7 2007, the International Swaps and Derivatives Association (ISDA) published the 2007 Partial Lookthrough Depository Receipt Supplement to the 2002 ISDA Equity Derivatives Definitions.
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Foreigners Given More Access to China's Securities Market
On December 28 2007, China's securities regulator amended its five-year old Rules on the Establishment of Securities Companies with Foreign Investment, in order to open the mainland market to more foreign investment.
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Hong Kong Issuers Enjoy Lower Disclosure Costs
New measures have been announced in Hong Kong to reduce the disclosure compliance costs for structured products issuers, including derivative warrants.
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China Allows Banks to Invest in Singapore
China's banking regulator has authorised mainland commercial banks to invest directly in Singapore stocks, fixed-income instruments and mutual funds as part of their wealth management operations under the Qualified Domestic Institutional Investor (QDII) programme.
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Longer-Dated Options Come to India
India's securities regulator issued a circular on January 11 which paves the way for the introduction of index options with longer tenures.
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India Allows Short Selling
The Reserve Bank of India (RBI) issued a circular on January 1 permitting foreign institutional investors (FIIs) and sub-accounts registered with the Securities and Exchange Board of India (SEBI) to short sell, lend and borrow equity shares of Indian companies.
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Hong Kong Widens Scope of Market Access Products
The Stock Exchange of Hong Kong Limited (Stock Exchange) is enhancing the local structured products regime with a set of new measures to facilitate the listing of a wider range of Market Access Products (MAPs), ultimately intended to further encourage financial innovation.
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India Revises CDS Guidelines
The Reserve Bank of India published a revised set of draft guidelines in mid-October on credit default swaps, to begin a second round of consultation, following the initial draft published in May 2007.
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China Allows Trading in Interest Rate Forwards
China's central bank has approved trading of interest rate forwards as of November 1. The People's Bank of China (PBoC) issued the Provisions for Administration of Business Concerning Forward Rate Agreements (the FRA Rules) in late September, saying on its website: "Interest rate forwards could help investors lock in future rate levels, so that they could effectively manage short term interest rate risks."
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Thailand Urges Caution on Selling Derivative Products
Thailand's central bank is understood to have asked domestic banks to be careful when marketing derivative-based products to their customers.
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India Cracks Down on Offshore Derivatives
India's securities regulator has imposed restrictions on foreign intermediaries in India's offshore derivatives market via participatory notes (P notes).
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Industry Faces Up to Retail Sales Guidelines
Five international trade associations have outlined a detailed guide for how manufacturers and distributors should work together in future when selling structured products to retail investors.
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Citi Court Victory Overcomes Conflicts Test
A recent landmark insider trading case in Australia is likely to have far-reaching implications for financial institutions, regulators and the securities industry in general.
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China Securities Regulator Issues New QDII Rules
Chinese securities brokerages and fund managers are now allowed to invest client funds overseas, following a recent further broadening of the qualified domestic institutional investor (QDII) scheme.
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Thailand Broadens Scope for Equity and Bond Derivatives
The Bank of Thailand (BOT) recently issued two new regulations to extend the scope of bond and equity derivative transactions that banks in the country are permitted to enter into.
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EU Clarifies Rules for Funds to Buy CDS
The Eligible Assets Directive relating to UCITS funds has clarified the extent to which UCITS funds may invest in credit default swaps (CDS). While UCITS are permitted to invest in CDS, they may not invest in any such instruments (whether cash- or physically-settled) if the deliverable or valuation obligation is a loan or the pool of deliverable or valuation obligations includes loans.
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Global Industry Bodies Discuss Retail Sales Process
Five leading international trade associations are closely involved in the debate over the future of managing the relationship between providers and distributors of retail structured products, having releasing a draft set of principles on the topic.
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UK Leads Regulatory Debate on Role of Distributors
As regulators around the world focus on the roles and responsibilities of different parties within the origination and distribution process for retail structured products, the UK"s financial regulator is playing a lead part in the process.
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India Nearer to Allowing Credit Derivatives
The Reserve Bank of India (RBI) seems to be responding proactively to market demands after announcing in its Annual Monetary and Credit Policy Statement for the Year 2007-08 a timetable to introduce credit default swaps (CDS).
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China Paves Way for Futures Trading
China's securities regulator recently issued new rules that have helped bring trading of exchange-based financial futures a step closer.
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New Hong Kong Listing Rules for Structured Products
The Stock Exchange of Hong Kong announced amendments to the Listing Rules in respect of expiry announcements for structured products, effective 27th April 2007.
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US Launches Crackdown on Structured Finance
The most powerful financial regulators in the US have come forward with a tough stance on how banks should identify and manage the risks of complex structured finance transactions.
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China Allows Securities Lending
With a view to boosting the liquidity of China’s bond markets, the People's Bank of China announced rules late last year that effectively authorise securities lending in the country.
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Hong Kong Puts Mis-Selling Under the Spotlight
Educating retail investors to alleviate concerns about potential mis- selling will be one of the Hong Kong Securities and Futures Commission’s (SFC’s) main goals in 2007, according to chief executive officer Martin Wheatley.
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India Staggers Towards Derivatives Trading
India is moving slowly closer to a consistent and coherent regulatory framework on derivatives transactions with the release of draft guidelines for banks and primary dealers at the end of 2006, but there are still some big hurdles to overcome.
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Thai Securities Watchdog Paves Way for Innovation
Product innovation as a means to helping develop Thailand’s capital market is one of the main objectives of the country’s Securities and Exchange Commission (SEC) this year.
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