AsianInvestor's regulatory round-up, Nov 12
China: Canada awarded RQFII quota
China has expanded the renminbi qualified foreign institutional investor (RQFII) scheme by giving Toronto a quota allowing direct investment in mainland securities, making Canada the first country in North America to receive one.
The news came soon after Qatar became the first Middle Eastern country to be awarded RQFII quota, receiving Rmb30 billion on November 3.
The Rmb50 billion ($8.2 billion) quota handed to Canada was part of a package of trade deals worth C$2.5 billion ($2.2 billion) agreed by prime minister Stephen Harper during his visit to Beijing for the Asia-Pacific Economic Cooperation meeting this week.
The central banks of China and Canada also agreed to a currency swap worth Rmb200 billion, allowing liquidity in renminbi and Canadian dolalrs to be made available to the relevant markets when required.
Meanwhile, French fund houses BNP Paribas Investment Partners and Carmignac Gestion received their first RQFII quotas, of Rmb3 billion each, on October 30. In addition, Singaporean bank DBS also got Rmb3 billion and UK fund house Investec Rmb1.5 billion.
Hong Kong/China: RMB conversion cap removed in HK
The Hong Kong Monetary Authority said it would, by next Monday (November 17), lift the daily cap of Rmb20,000 ($3,264) on how much Hong Kong residents can convert into renminbi.
The move is aimed at complimenting the pending launch of the Shanghai-Hong Kong Stock Connect, slated for the same date.
In another measure the HKMA has since November 10 been offering intra-day RMB funds of up to Rmb10 billion to authorised institutions participating in RMB business in Hong Kong.
In September the HKMA said it was in the process of designating seven banks as primary liquidity providers for the offshore RMB market in Hong Kong and was providing a dedicated repo facility to each one.
“With the commencement of Shanghai-Hong Kong Stock Connect, these measures will assist banks in managing their RMB liquidity,” the HKMA said.
Thailand: Thai life insurers await Reit loan rules
Life insurance companies in Thailand are awaiting the imminent release of regulations that would allow them to provide loans to local real estate investment trusts (Reits).
One Bangkok-based chief investment officer at a big insurer expects it to happen in December, after the Office of Insurance Commission approved the asset class at end of October.
His investment committee has given approval to do this, and such instruments would be “fairly attractive” in terms of annual yield, probably in the high single digits in percentage terms.
Singapore: Bourse streamlines secondary-listing rules
Singapore Exchange has streamlined rules for secondary listings to attract more business.
As from November 3, SGX deems a company as coming from a “developed” jurisdiction if index providers FTSE and MSCI both classify the jurisdiction of the company’s home exchange as “developed”. This covers 23 jurisdictions, including Singapore. SGX will treat all other jurisdictions as “developing”.
Where a company is secondary-listed on SGX and primary-listed on the main board of any of the 22 developed jurisdictions other than Singapore, the exchange will now not impose additional regulatory requirements. Previously all firms had to comply with additional requirements before and after achieving a secondary listing.
For a company from a developing jurisdiction, the bourse will review its home exchange’s legal and regulatory requirements and may impose additional requirements to ensure sufficient shareholder protection and corporate governance standards.
SGX’s website now provides more information on secondary listings, including a clear segregation between these and primary-listed companies, an indication of whether the secondary listing is from a developed or developing jurisdiction, and details of the scope of additional requirements, where applicable.
International: OECD-G20 tax information exchange deal
The standard on automatic exchange of information of tax was endorsed by the Organisation for Economic Co-operation and Development and the Group of 20 countries in Berlin on October 29.
The framework provides for exchange of all financial information – such as balances, interest and dividends – on an annual basis automatically between different members.
51 jurisdictions, of which Korea is the only country so far from Asia, have signed the agreement. Early adopters have pledged to work towards executing their first information exchange(s) by September 2017. Others are expected to follow in 2018.
China, Japan, India, Indonesia, Malaysia and Singapore have all expressed interested in joining, as reported.
“We are making concrete progress toward the G20 objective of winning the fight against tax evasion,” OECD Secretary-General Angel Gurria said after the signing ceremony. “The world is quickly becoming a smaller place for tax cheats, and we are determined to ensure that developing countries also reap the benefits of greater financial sector transparency.”
A status report on committed and not committed jurisdictions will be presented to G20 leaders during their annual summit in Brisbane, Australia on November 15-16.
Other recent regulation-related stories on AsianInvestor.net:
Fund houses plan to wait on Stock Connect
Asset managers lobby on mutual recognition
More clarity tipped on Stock Connect this week
Regulators announce launch of Stock Connect
Value of legal talent rising in funds industry
Panellists cite concerns over MPF plans
Leveraged and inverse ETFs come to Taiwan
HK fund firms urged to use foreign RQFII quota
HK SFC bans ex-Fulbright exec for 18 months