Saturday 28th November 2015
NEWS TICKER, FRIDAY, NOVEMBER 27TH: The Taiwan Stock Exchange (TWSE) has launched an online ‘Rules & Regulations Directory’, providing international investors and the media with a centralised location for all 238 Taiwan capital market regulations in both English and Chinese. Regulations available via the Directory include rules for: primary and secondary listings, corporate governance, clearing and settlement, margin trading, ETFs, market monitoring and regulation, among others. The Directory features an easy-to-navigate graphical interface, allowing investors to locate regulations by category or by tree structure, as well as a comprehensive search function that automatically suggests laws and regulations based on key words. The English translation of the regulations was provided by multinational law firms -The European Parliament’s negotiation team has informed the European Commission that it is ready to accept a one-year delay of the entry into force of MiFID II. However, this only applies if the Commission finalises the implementing legislation swiftly and thereby takes into account the European Parliament’s priorities. Furthermore, Commission and ESMA need to come up with a clear roadmap on the implementation work and especially for setting up the IT-systems. That’s telling them! - China shares fell 5.5% in trading today; it’s a big fall, the biggest since August. Analysts say it is related to the regulator’s announced determination to enforce good practice on the securities industry. Hong Kong's Hang Seng Index fell 1.9% today and 3% over the week. Elsewhere, Japan shares fell 0.3% after the Nikkei neared the 20000 barrier on Thursday. Australia's S&P/ASX 200 fell 0.2% and South Korea's Kospi slipped 0.1%. The Straits Times Index (STI) ended 25.57 points or 0.89% lower to 2859.12, taking the year-to-date performance to -15.04%. The top active stocks today were OCBC Bank, which declined 0.46%, SingTel, which declined 0.26%, UOB, which declined 0.10%, DBS, which declined 0.36% and Global Logistic, with a 2.44% fall. The FTSE ST Mid Cap Index declined 0.48%, while the FTSE ST Small Cap Index rose 0.03%.Brent crude was last down 0.2% at $45.38 a barrel. U.S. oil prices fell 0.4% on Thursday amid signs of robust US production despite data showing a lower-than-expected increase in US oil inventories and a decline in the number of working oil-rigs in the country. Gold prices were down 0.3% at $1,066.70 a troy ounce - The EBRD has extended a total of $70m in loans to Mongolia’s Khan Bank, aimed at small and medium-sized enterprises (SMEs). The EBRD package will include financing for SMEs and their value chains, sustainable energy projects designed to improve energy efficiency, a risk-sharing facility that will help Khan Bank clients access longer-term financing, and an increase in the trade finance facility, which helps companies perform export and import operations. The sustainable energy part of the financing package, which is $10m, is part of the special financing framework, Mongolian Sustainable Energy Financing Facility. The EBRD has such facilities in many countries of operations; they are part of the Bank’s drive for green economy transition. The EBRD is also providing technical cooperation as part of the sustainable energy financing portion, funded by the multi-donor EBRD Shareholder Special Fund. Khan Bank, which has around 500 offices across Mongolia, is one of the largest commercial banks in the country. The loan agreements were signed by Khan Bank CEO Norihiko Kato and the head of the EBRD office in Mongolia, Matthieu Le Blan.

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Rules could curb collateral movement, ICMA warns

Thursday, 03 April 2014
Rules could curb collateral movement, ICMA warns Regulators need to consider the impact of financial regulation on the movement of collateral according to a new study by ICMA’s European Repo Council.

Regulators need to consider the impact of financial regulation on the movement of collateral according to a new study by ICMA’s European Repo Council.

The trade body has highlighted potential systemic risks of inhibiting collateral fluidity and the negative impact this could have on the stability and efficiency of capital markets.

A number of regulatory and market driven initiatives are in place to meet the challenges that currently constrain the efficient movement of collateral, including Target2-Securities, EU Central Securities Depository Regulation (CSDR) and tri-party settlement interoperability between ICSDs/CSDs.

However, according to ICMA’s study entitled 'Collateral is the new cash: the systemic risks of inhibiting collateral fluidity’, regulations such as the Basel III Leverage Ratio and the proposed EU Financial Transaction Tax (FTT) could prohibit the effective functioning of collateral markets.

For the markets, these regulations could mean less liquid secondary markets for securities, greater asset price volatility. Hedging, and the pricing and management of risk, could become more difficult. There may also be greater execution risks for investors.

Meanwhile the economy could suffer from reduced investment in capital and businesses, higher borrowing costs for governments, increased costs for corporate capital raisers and place more onus on central banks to support markets.

“If banks find it economically inefficient, or are restricted by regulation from supporting the critical functions of sourcing, pricing, managing, and mobilising collateral, and the infrastructure is not in place for the efficient mobilisation of collateral, then the basic intermediation roles of banks and financial markets - that of maturity, risk, and credit transformation - would be undermined,” says the study.

The proposed EU 11 Financial Transaction Tax (FTT), were it to be applied to securities finance trades, would severely impair the effective functioning of collateral markets. Another ICMA study suggests that the size of the European repo market could be reduced by as much as 66%, with the market effectively closed for transactions under six months’ maturity.

In addition, new Basel III capital adequacy requirements are making the balance sheets of banks more expensive. As a result, banks are having to rethink their business models and priorities. Low-margin, capital-intensive businesses, such as repo, are becoming less attractive.

“Sound regulation is essential for the efficient and stable functioning of the global funding and capital markets that support our economies,” says the IMCA’s report. “So is collateral. In this respect, regulation should not only avoid inhibiting collateral fluidity, but, where possible, it should aim to enhance it.

Godfried De Vidts, chair of ICMA’s European Repo Council, adds: “As we build the framework of new financial regulation for safer markets we should steer clear of embedding systemic risks which could contribute to future financial crises.”

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